The rules in relation to the JobKeeper extension to apply from 28 September 2020 became law effective today, 16 September 2020. In essence, the rules are as follows:
- The two JobKeeper extension periods are:
(a) Fortnight commencing on or after 28 September 2020 and ending on or before 3 January 2021
(b) Fortnight commencing on or after 4 January 2021 and ending on or before 28 March 2021
- To be eligible for the JobKeeper extension from 28 September 2020 to 3 January 2021, an entity that has already received JobKeeper under the existing scheme must meet an additional test whereby their actual GST turnover has declined by at least 30% in the September 2020 quarter compared to the September 2019 quarter
- To be eligible for the JobKeeper extension from 4 January 2021 to 28 March 2021, an entity that has already received JobKeeper under the existing scheme must meet an additional test whereby their actual GST turnover has declined by at least 30% in the December 2020 quarter compared to the December 2019 quarter
- For new entrants to the JobKeeper program, in addition to the new actual decline in GST turnover test, they must also meet the original projected turnover test for a month or quarter, however, if they meet the new actual decline in GST turnover test they will also be deemed to have met the original projected turnover test
- For entities that are already in receipt of JobKeeper payments, no re-enrolment notification is required to the ATO. For new entrants, they will be required to notify the ATO of their JobKeeper eligibility. The exact timing and form in this regard has not been released by the ATO as yet for new entrants
- Entitlement to JobKeeper in each of the two extension periods is assessed separately to current JobKeeper eligibility. If an entity is currently eligible for JobKeeper but does not meet the actual decline in turnover test for eligibility from 28 September, they may still be eligible for the January to March period. Alternatively, they may be eligible for the first extension period but ineligible for the second extension period. Further, if an entity was not eligible to receive the current JobKeeper payments, they may be eligible for either or both JobKeeper extension periods
- The rules continue to provide power to the Commissioner of Taxation to determine an alternative test to apply to the relevant comparison period, if either the September 19 quarter or December 19 quarter as appropriate, is not a representative comparable quarter. As with the first round of JobKeeper eligibility, an entity can only apply the alternative test if they have failed the basic test as outlined above and are only prescribed in relation to specific classes of entities. For the purposes of the new actual decline in GST turnover test, the alternative test quarter must be a quarter. The ATO has not as yet published the alternative tests
- The rules also provide power to the Commissioner to determine, by legislative instrument, the basis upon which GST turnover is to be calculated. Although the explanatory statement to the rules does not specifically say that GST turnover is to be calculated based on the method used in the entity’s BAS, i.e cash or accrual, it does say that it is expected the actual decline in turnover test will align to the information reported in GST returns for the purpose of calculating GST turnover. This has been confirmed by the ATO, therefore GST turnover is to be calculated in the same way as you prepare your BAS. If this is on an accruals basis, you need to consider adjusting your calculations for any GST adjustments that relate to prior periods, such as writing off a debtor.
- The amount of the JobKeeper payment per employee will reduce from 28 September 2020 to either $1200 or $750 per fortnight and again from 4 January 2021 to either $1000 or $650 per fortnight. The eligible amount per employee is to be determined on an employee by employee basis with reference to the number of hours they worked during the 28 day reference period prior to either 1 March 2020 or 1 July 2020. To be eligible for the higher payment, the employee must have worked 80 hours or more during the reference period. The hours are based on the actual hours the employee worked, and any hours for which they received paid leave (e.g. annual, long service, sick, carers and other forms of paid leave) or paid absence for public holidays.
- For the purposes of determining entitlement to the higher or lower payment, the 28 day reference period is assessed based on the 28 days prior to and including the last pay period before 1 March 2020 or 1 July 2020, as follows:
(a) The last 2 consecutive fortnightly pay periods;
(b) the last 4 weekly consecutive pay periods; or
(c) If paid monthly, the average hours for 28 days in that month on a pro-rata basis
The Commissioner will also have the power to determine an alternative reference period for a class of employees where these reference periods are not appropriate, such as where an employee is receiving parental pay. Both periods can be tested and the period that produces the best outcome can be used. For example, if an employee’s hours were 77 hours prior to 1 March 2020 and were 82 hours prior to 1 July 2020, the 1 July test can be used for eligibility for the higher payment. The same test applies to both extension period 1 and 2
- Employers must notify the Commissioner of the higher or lower rate in respect of each employee from 28 September 2020. If an entity is entitled to a higher rate and does not notify the ATO then they will not be entitled to receive the JobKeeper payment until they notify the ATO. At this point the ATO has not released information on how they must be notified. I would expect that this will occur via either the ATO portal or via single touch payroll
- For business participants, the 80-hour test is based on the hours of active engagement in the business for the month of February 2020. This requires an assessment of the hours that the business participant was actively operating the business or undertaking specific tasks in business development and planning, regulatory compliance or similar activities. There will also be a requirement for business participants who are entitled to the higher payment to make a declaration in an approved form to the ATO declaring that their active engagement hours are 80 hours or more. Again, the ATO has not released any information in this regard. If the declaration is not provided the lower amount will apply.