Changes to JobKeeper

Changes to JobKeeper

The JobKeeper scheme was discussed in the June 2020 edition of TaxWise News. Since then, the Government has announced a number of changes.

  • The scheme will continue for an additional 6 months until 28 March 2021.
  • More employees are eligible for JobKeeper.
  • The eligibility rules will be revised.
  • The payment rates will be reduced. 

At the date of publication of this edition of TaxWise News, not all of the changes had been implemented.

Eligible employees – from 3 August 2020

A person is an eligible employee for a JobKeeper fortnight starting on or after 3 August 2020 if they are:

  • employed by an eligible employer (including if they were stood down or re-hired) at any time in the JobKeeper fortnight; and
  • an eligible employee for a JobKeeper fortnight ending before 3 August 2020 using either the 1 March 2020 or 1 July 2020 employment test.

To meet the 1 July 2020 employment test, the employee must, on 1 July 2020:

  • be employed by the eligible employer (or another entity in their wholly owned group), either as a non-casual employee (whether full-time, part-time or fixed-term) or a long term casual employee (employed on a regular and systematic basis during the 12 month period that ended on 1 July 2020);
  • not be a permanent employee of any other employer; and
  • be aged 18 years or older (a person aged 16 or 17 can also qualify if independent or not undertaking full time study on 1 July 2020).

The employee must also meet the existing residency tests and not be in receipt of parental leave, dad and partner pay or workers compensation for total incapacity for work.

If a person started work with their current employer after 1 July 2020, the employer will not be eligible to claim JobKeeper payments for that employee.

Additional turnover test – from 28 September 2020

From 28 September 2020, your business (including if you are a sole trader) will be required to re-assess its eligibility with reference to actual GST turnover in the September 2020 quarter. The business will need to demonstrate that it has met the relevant decline in turnover test in this quarter to be eligible for JobKeeper from 28 September 2020 to 3 January 2021.

Your business will need to further reassess its eligibility in January 2021. The business will need to demonstrate that it has met the relevant decline in turnover test in the December 2020 quarter to remain eligible for JobKeeper from 4 January to 28 March 2021.

Revised payment rates – from 28 September 2020

The JobKeeper payment rates will reduce from 28 September 2020 as shown in the table below.

Period Full rate per fortnight Lower rate per fortnight
28 Sep 2020 to 3 Jan 2021 $1,200 $750
4 Jan 2021 to 28 Mar 2021 $1,000 $650

The full rate applies to:

  • eligible employees who, in the 4 weeks before 1 March 2020 or 1 July 2020 (as appropriate), were working for 20 hours or more a week on average; and
  • eligible business participants (eg sole traders) who were actively engaged in the business for 20 hours or more per week on average in February 2020 or in June 2020 (as appropriate).

The lower rate will apply to all other eligible employees/business participants.

Other requirements

If you are enrolling for JobKeeper payments for the first time, you must enrol your business and business participant (if appropriate) by the end of the month you wish to claim for.

Don’t forget you must make a business declaration each month (no later than the 14th day) to claim JobKeeper payments for the previous month.

Tax consequences

Don’t forget to include JobKeeper payments in your business’ tax return (or your tax return if you’re a sole trader) as assessable income. But the wages that are effectively subsidised by JobKeeper payments are deductible.

JobKeeper payments received by your business are not subject to GST, and do not have to be taken into account in working out the decline in turnover.

Tip!  The JobKeeper scheme is complicated. Talk to your tax adviser to see if your business is eligible.

Ref: TaxWise Business September 2020

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