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What the JobKeeper Payment changes mean to your business

By Michael Walsh, CEO of Walshs

The Federal Government has unveiled plans to extend its JobKeeper Payment by six months.

The payment was originally due to expire on 27 September, 2020, but the Government has announced it will be extended by a further six months to March 2021, for eligible businesses and self-employed (called business participants).

At the same time, the amount of the payment will be reduced and a lower payment rate will be introduced for those who work fewer hours.

The extension will be broken down into two time periods, when the new rules will be:

First extension period (28 September 2020 – 3 January, 2021):

* Eligible employers and business participants will need to demonstrate an actual (previously projected) turnover decline (at least 30%) in both the June 2020 and September 2020 quarters (generally by comparison to June 2019 and September 2019 quarters). The turnover decline will generally be determined by reference to the actual BAS lodged.

*  Payment rates will be:

  • $1200 per fortnight for employees who, in the four weeks of pay periods before 1 March, 2020, were working an average of 20 hours or more a week and for self-employed workers who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020.
  • $750 per fortnight for employees and business participants who worked less than 20 hours  in the four weeks before 1 March, 2020.

Second extension period (4 January 2021 – 28 March 2021):

* Eligible employers and business participants will need to demonstrate an actual turnover decline (at least 30%) in each  of the June 2020, September 2020 and December 2020 quarters (by comparison to June 2019, September 2020 and December 2020 quarters). The turnover decline will generally be determined by reference to the BAS lodged.

* Payment rates will be:

  • $1000 per fortnight for employees and business participants who, in the four weeks of pay periods before 1 March, 2020, were working for 20 hours or more per week on average in the month of February 2020.
  • $650 per fortnight for employers and business participants who worked less than 20 hours in the four weeks before 1 March, 2020.

Matters to consider:

* Because the decline in turnover will be determined by reference to actual BAS lodged, and the lodgement date will be after a relevant pay fortnight, the ATO will have discretion to extend the payment time to pay employees in order to meet the wage conditions.

* The JobKeeper Payment will continue to remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period.

* ATO will have discretion to set out alternative tests where an employee’s or business participant’s hours were not usual during the February 2020 reference period (e.g. annual leave).

*  The JobKeeper Payment will continue to be made by the ATO to employers/business participants in arrears. Wages will still need to be paid to employees equal to, or greater than, the amount of the JobKeeper Payment (before tax) based on the payment rate that applies to each employee.

*  When making claims during the first and second extension periods, businesses will have to nominate the relevant payment rates ( 20 hours > or <) for each eligible employee and/or business participant.

*  Eligible employees – the eligibility rules remain unchanged. 

Action required:

No action is required at this stage to claim JobKeeper 2. Applications will commence when businesses lodge their September 2020 BAS.

For more information on the changes, contact our JobKeeper team at jobkeeper@walshs.com.au or phone 32215677 and ask for one of the team.