JobKeeper 2.0 Special Update

Thursday 1st October 2020

The Federal Government has only recently legislated extensions to the JobKeeper system, and ALL of our clients need to be aware of what is happening in this very unique space.  

Our office is here to help if you believe that you are entitled to the JobKeeper payments – this relates to both for our business clients and our personal tax clients.

For our business clients, we have been assisting you for the last six months to ensure that this system is administered correctly.  Many of you have been managing this process yourself, and some of our business clients did not qualify in the first instance to enter the JobKeeper system.

For our personal tax clients, many have been recipients of these payments from their employers enrolling in the system.  If you are not yourself a business client, we ask that you keep in regular contact with your employer to see if they qualify for JobKeeper currently and if they will be eligible moving forward.

The Team here at Lidgerwoods trust that you are all keeping safe and healthy, and we are here to help if you need our assistance.  Our office door is still closed, we are not seeing anyone face to face, and some of our staff are working from home, but we are all still here to help you during office hours (via phone, email or online means) to guide you through this truly unique and unusual health and economic situation.  Please be patient with us at this time too, as we are currently still inundated with enquiries and questions.

The attached is a very detailed synopsis of the system, and we understand that this will be very difficult for some to interpret, so please just contact our office if you have questions regarding this complex system and how it may relate to you.

We are with you, and we are all in this together.

The Lidgerwoods Team

Marc, Sophie, Sharon, Louise, David, Darcy & Kylie

JobKeeper Extension Payment Scheme

A QUICK SUMMARY
Thursday 1 October 2020

To qualify for the JobKeeper Extension No.1 the basis of qualification has changed, and a business must:

• have at least a 30% reduction in Quarterly GST TURNOVER for the July-Sept 2020 quarter compared the same quarter last year (as lodged on your BAS).
• GST turnover is based upon your BAS’s as lodged using your current GST method (Cash or Accruals) – so you need to get your Sept20Q BAS completed to self-assess eligibility.
• If not registered for GST – other rules exist – contact us to clarify.
• If you cannot fairly compare your current quarter TURNOVER to the prior year – other Alternate Rules could apply – contact us to clarify.
• The fortnightly amounts receivable have now been REDUCED – and the amount will now depend upon the hours worked by your employees or by the business owner – details attached.

There are a multitude of other rules to clearly define how JobKeeper will be determined and paid, and we have attempted to advise you this detail in the next article……

JobKeeper Extension Payment Scheme – the fine print…

Thursday 1 October 2020 

The purpose of this Newsletter is to enable you to make an assessment of your eligibility for the Government's JobKeeper Payment Scheme.  It is not a comprehensive guide as the rules are quite complex.  If, after you have examined the information in this Newsletter and believe that you may be eligible, please contact us immediately so we may assist you further.

The extension of the scheme will see a more targeted and tapered approach with a two-tier wage subsidy and two additional JobKeeper periods of three months each.

What's new?

From 28 September 2020:

• a two-tier payment rate will apply based on the worker’s average weekly work hours
• the current $1,500 per fortnight payment rate will be reduced on 28 September 2020 and reduced further on 4 January 2021
• the decline in turnover will be retested on a quarterly basis, and
• the decline in turnover test will be based on actual GST turnover.

From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be:

• TIER ONE - $1,200 per fortnight for all eligible employees and for eligible business participants who were working for 80 hours or more in the 28 days before the end of the most recent pay period ending before 1 March 2020 or for all eligible employees who were working for 80 hours or more in the 28 days before the end of the most recent pay period ending before 1 July 2020, and
• TIER TWO - $750 per fortnight for other eligible employees and business participants.

From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be:

• TIER ONE - $1,000 per fortnight for all eligible employees and for business participants who were working for 80 hours or more in the 28 days before the end of the most recent pay period ending before 1 March 2020 or for all eligible employees who were working for 80 hours or more in the 28 days before the end of the most recent pay period ending before 1 July 2020; and
• TIER TWO - $650 per fortnight for other eligible employees and business participants.

Is your business eligible?

An employer is entitled to the JobKeeper payment in respect of an individual (an employee) in relation to an extension period if it meets the revised eligibility rules.

Decline in turnover Test

Decline in turnover test

From 28 September 2020, businesses seeking to claim the JobKeeper payment will be required to demonstrate that they have suffered a decline in turnover using actual GST turnover (rather than projected GST turnover).

From 28 September 2020, businesses will be required to reassess their eligibility with reference to their actual GST turnover in the September quarter 2020 to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021 (the first extension period).

From 4 January 2021, businesses will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in the December quarter 2020 to be eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021 (the second extension period).

For the first extension period businesses will need to demonstrate that their actual GST turnover has fallen by 30% in the September quarter 2020 (July, August, September) compared to the September quarter 2019.

For the second extension period businesses will need to demonstrate that their actual GST turnover has fallen by 30% in the December quarter 2020 (October, November, December) compared to the December quarter 2019.

The Commissioner of Taxation will have discretion to set out alternative tests that would establish eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019, in line with the Commissioner’s existing discretion.

The 30% reduction applies to businesses turning over less than $1 billion.

Eligible employees

Employees are eligible in the extension period if they:

• are currently employed by an eligible employer (including if you were stood down or rehired)
• were for the eligible employer either:

–      a full-time, part-time or fixed-term employee at 1 July 2020; or

–      a long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer.

• were aged 18 years or older at 1 July 2020 (if you were 16 or 17 you can also qualify if you are independent or not undertaking full time study).
• an Australian resident.

Some employees are not eligible if they receive certain forms of Government assistance – such as JobSeeker.

Wage condition

You satisfy the wage condition in respect of an employee for a JobKeeper fortnight in the extension period where their gross pay will exceed the relevant JobKeeper rate.

From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be:

• TIER ONE - $1,200 per fortnight for all eligible employees who were working for more than 80 hours or more in the 28 days before the end of most recent pay period ending either before 1 March 2020 or 1 July 2020, and
• TIER TWO - $750 per fortnight for other eligible employees.

From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be:

• TIER ONE - $1,000 per fortnight for all eligible employees who were working for more than 80 hours or more in the 28 days before the end  of most recent pay period ending either before 1 March 2020 or 1 July 2020, and
• TIER TWO - $650 per fortnight for other eligible employees.

The Commissioner of Taxation will have discretion to set out alternative tests where an employee or business participant’s hours were not usual during the February and/or June 2020 reference period (the period with the higher number of hours worked is to be used for employees with 1 March 2020 eligibility).

Guidance has been provided by the ATO where the employee was paid in non-weekly or non-fortnightly pay periods and in other circumstances the general rules do not cover.

The JobKeeper Payment will continue to be made by the ATO to employers in arrears. Employers will continue to be required to make payments to employees equal to, or greater than, the amount of the relevant JobKeeper Payment (before tax), based on the payment rate that applies to each employee.

You are required to give information about the entitlement for the fortnight, including details of the individual and the relevant rate, to the Commissioner, in the approved form. 

You have not opted out of the scheme

An employer is not entitled to the JobKeeper payment if they notify the Commissioner that they no longer wish to participate in the JobKeeper scheme. This notification must be made in the form approved by the Commissioner.

Eligibility based on ‘business participants’ who are not employees

The Rules also allow a limited entitlement to the JobKeeper payment for certain individuals who are not employees of entities but who are actively engaged in the business carried on by a sole trader, partnership, trust or company (i.e. not passive partners, shareholders and beneficiaries).

In relation to a fortnight, the individual must be ‘actively engaged’ in the business carried on by the entity. They cannot also be an employee of the entity at any time during the fortnight.

The individual must have met the following conditions on 1 March 2020:

• they were aged 16 years or over;
• they were actively engaged in the business;
• their relationship to the entity was as outlined above;
• an Australian resident.

The individual must give their entity a ‘nomination notice’ in the approved form, and at the time of the nomination, they cannot be an employee (other than a casual employee) of another entity.

The entity must satisfy the general eligibility requirements for employers outlined above, and the individual is an ‘eligible business participant’ and not an employee. The entity must notify an individual in writing within seven days of giving the individual’s information to the Commissioner for the fortnight (except for sole traders).

There can only be one eligible business participant nominated for each entity.

The tier 1 rate of the JobKeeper payment will apply to your eligible business participant if they satisfy the 80-hour threshold. They satisfy this if they:

• were actively engaged in your business for 80 hours or more in February 2020.
• have provided you with a written declaration confirming this.

If they do not meet both these requirements you will be entitled to the tier 2 rate for your eligible business participant.

Integrity rule

An entity is not entitled to a JobKeeper payment for an eligible business participant unless the entity had an ABN on 12 March 2020 (or a later time allowed by the Commissioner) — i.e. an entity that is recently created to access the JobKeeper payment will not qualify.

In addition, the entity must be able to demonstrate that it was in business and has notified the Commissioner by either:

• an amount was included in the entity’s assessable income for the 2018–19 income year in relation to it carrying on a business, and the Commissioner was notified on or before 12 March 2020 (or a later time allowed by the Commissioner); or
•  the entity made a taxable supply in a tax period that started on or after 1 July 2018 and ended before 12 March 2020, and the Commissioner was notified on or before 12 March 2020 (or a later time allowed by the Commissioner).

Important  - Action Required by 31 October 2020

You must meet the wage condition for the first two fortnights (commencing 28 September and 12 October) by 31 October 2020.  That is, you must ensure you pay the relevant rate to your employees before 31 October 2020.

ATO Link

https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/JobKeeper-extension-what-you-need-to-do-as-a-business-or-not-for-profit/

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Lastly we welcome your feedback.  If you found this E-Newsletter very useful (or not?),
we’d appreciate your feedback either way.

'The Team' at Lidgerwoods Accountants