- The legislative instrument implementing the Government’s changes to the JobKeeper scheme was registered on 15 September 2020
- Entities are now required to reassess their decline in turnover over two set periods
- There are two tier payment rates for JobKeeper based on an 80 hour work/actively engaged test over a specified 28-day period
On 15 September 2020, the Australian Treasurer Josh Frydenberg registered the legislative instrument, Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 8) 2020 (the Rules), which implements the announced changes to the JobKeeper scheme over the extended period from 28 September 2020 to 28 March 2021.
The extension of JobKeeper applies to qualifying entities in respect of their eligible employees, business participants or religious practitioners. The changes in the Rules build more flexibility into the JobKeeper scheme recognising that circumstances can change quickly. Thus, there is the requirement to reassess an entity's actual decline in turnover for two set periods and a two-tiered payment based on hours of work or engagement.
Nevertheless, the changes do not affect any entitlements payable under the original JobKeeper scheme prior to 27 September 2020. Similarly, the changes to do not provide the opportunity for entities to change any elections they have previously made under the JobKeeper scheme. This includes any election by ACNC-registered charities to disregard certain supplies made to the Government.
Reassessing decline in turnover
For an entity to continue to receive the JobKeeper payments over the extended period, the entity must satisfy the actual decline in turnover test (section 8B of the Rules):
- if the JobKeeper fortnight begins before 4 January 2021 – the test must be satisfied for the quarter ending on 30 September 2020
- if the JobKeeper fortnight begins from 4 January 2021 onwards – the test must be satisfied for the quarter ending 31 December 2020.
This mean entities on JobKeeper do not have to satisfy the actual decline in turnover test for both the September quarter and December quarter to be able to receive payments for the JobKeeper fortnights beginning 4 January 2021. Furthermore, according to the explanatory statement to the Rules, an entity that drops out of the JobKeeper scheme after 28 September 2020 and then requalifies in the next period, does not need to notify the Commissioner again that it elects to participate in the scheme.
Actual decline in turnover test
The actual decline in turnover test applies the same thresholds for the original decline in turnover test (i.e. the percentage decline for the quarter must be equal to or greater than 15% for certain ACNC registered charities, 30% for entities with $1 billion or less aggregated turnover and 50% for entities with over $1 billion aggregated turnover) but uses current GST turnover rather than projected GST turnover. According to the explanatory statement, it does not matter for the purposes of the new test whether the entity was required to use a different percentage in applying the original decline in turnover test at an earlier time (e.g. because it applied the original test in the previous income year).
Entities can still use the Commissioner's alternative decline in turnover test (for specified situations where using the 2019 period as a comparison is not appropriate) and the modified decline in turnover test (for group structures with employer entities) in assessing whether they qualify for the JobKeeper scheme – current GST turnover is to be used in place of the projected GST turnover. The Commissioner has made new alternative decline in turnover test rules for the extended period. The Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules (No. 2) 2020 provides an alternative bases for satisfying the actual decline in turnover test (section 8B) and the modified original decline in turnover test (modification is outlined below).
The ATO has provided guidance on its website on the actual decline in turnover test.
In calculating an entity's current GST turnover for a quarter for the actual decline in turnover test, the Commissioner has made a determination, Coronavirus Economic Response Package (Payments and Benefits) (Timing of Supplies Made and Decline in Turnover Test) Rules 2020 (No. 1. The approach of this instrument is to align the calculation of current GST turnover for the actual decline in turnover test with how entities would attribute GST payable on supplies to a tax period under the A New Tax System (Goods and Services Tax) Act 1999. That is, it aligns with how businesses are required to allocate their supplies to a reporting period when completing their business activity statement.
Entities that have not previously participated in the JobKeeper scheme are required to satisfy both the original decline in turnover test and the new decline in turnover test. However, the Rules have modified the original decline in turnover test to give entities the choice to compare the 'projected GST turnover' of:
- a calendar month that ends after 30 September 2020 and before 1 January 2021, or
- the quarter ending 31 December 2020
with a relevant comparison period.
This extension of the testing period ensures that JobKeeper can still be accessed by entities that first experience a significant decline in turnover during the December quarter.
The ATO has provided guidance on the application of the decline in turnover tests for new participants.
Two tiered payment rate
The Rules sets out two tiers of payment rates for eligible employees, business participants and religious practitioners which have not changed from the Government's announcement. To recap:
- Higher rate:
- 28/9/2020 – 3/1/2021 - $1,200
- 4/1/2021 – 28/3/2021 - $1,000
- Lower rate:
- 28/9/2020 – 3/1/2021 - $750
- 4/1/2021 – 28/3/2021 - $650.
However, whether an individual is eligible for the higher rate depends on whether the individual worked or was actively engaged for 80 hours or more for a reference period. Otherwise, the individual is eligible for the lower rate.
Reference period means for (section 4A):
- an eligible employee – 28-day period at the end of the most recent pay cycle for the employee that ended before 1 March 2020 or 1 July 2020
- the eligible business participant – the month of February 2020
- an eligible religious practitioner – the month of February 2020.
Entities applying the 80 hour test for:
- Eligible employees – take into account hours of work, paid leave and paid public holidays
- Eligible business participant – work out the time spent 'actively engaged in the business' and the individual must provide:
- if the entity is a sole trader, a notification via the business monthly declaration
- Eligible religious practitioners – work out the time spent doing activities in pursuit of their vocation as a member of the religious institution and the individual must provide the religious institution with a written declaration confirming the 80 hours.
If the standard reference period is not suitable, the Commissioner has made a determination, Coronavirus Economic Response Package (Payments and Benefits) Alternative Reference Period Determination 2020, to provide an alternative reference period for the 80 hour test for particular employees. The ATO has published guidance on the alternative reference period.
The Commissioner has also made a determination, Coronavirus Economic Response Package (Payments and Benefits) Higher Rate Determination 2020, which specifies circumstances in which the higher rate of an entity's JobKeeper payment applies to an eligible employee because the hours of work are not readily ascertainable as a result of no (or incomplete) records.
The ATO has published guidance on the application of the 80 hour test and the notification requirements. Employers already on JobKeeper and are eligible for the first extension period can notify the ATO whether their eligible employees are on the higher rate or lower rate in their business monthly declaration in November 2020.
The ATO has allowed employers until 31 October 2020 to meet the wage condition for all employees on JobKeeper for JobKeeper fortnights starting on 28 September and 12 October 2020 (see ATO JobKeeper key dates).
Extension of JobKeeper legislation receives Royal Assent
The legislation implementing the extension of the JobKeeper payments has received Royal Assent on 3 September 2020.Read more