The Treasurer has released the detailed Rules governing eligibility for JobKeeper after 28 September 2020 (known as JobKeeper 2.0). The Tax Commissioner has also issued a legislative instrument outlining the alternative tests for satisfying the additional decline in turnover test.
As a starting point, for an entity to be eligible for JobKeeper 2.0 it must satisfy the following conditions:
- It must have carried on a business in Australia on 1 March 2020 (different rules apply for non-profit entities);
- It must pass the original decline in turnover test; and
- It needs to pass an additional decline in turnover test.
The original decline in turnover test is the same test as was necessary to access JobKeeper originally, and involves comparing projected GST turnover for a particular month or quarter in 2020 with current GST turnover for the corresponding period in 2019 to determine if there is a decline in turnover of the relevant percentage (i.e., 15%, 30% or 50% depending on the entity). As part of the new rules, the periods in which entities can pass the original decline in turnover test have been expanded. The test will be satisfied if the entity can pass the test for any of the following periods:
- Monthly test: April, May, June, July, August, September, October, November, December
- Quarterly test: June quarter, September quarter or December quarter
Once the original decline in turnover test has been met, it is necessary to confirm that an additional decline in turnover test is met to access JobKeeper for each of the two additional periods (28 September 2020 to 3 January 2021, and 4 January 2021 to 27 March 2021).
For the first period (28 September 2020 to 3 January 2021), the entity must be able to show that current GST turnover for the September 2020 quarter has dropped by the required amount compared with current GST turnover for the September 2019 quarter.
For the second period (4 January 2021 to 28 March 2021), the entity must be able to show that current GST turnover for the December 2020 quarter has dropped by the required amount compared with current GST turnover for the December 2019 quarter.
The way the rules are drafted means that an entity can potentially access JobKeeper for the extended periods between 28 September 2020 and 3 January 2021 and/or 4 January 2021 and 28 March 2021 even if it doesn’t qualify for JobKeeper in an earlier period.
In relation to the new additional decline in turnover tests, it is important to note that these only use the concept of “current GST turnover”. This firstly means that entities will be using actual GST turnover figures rather than estimated or predicted figures. The ATO has also confirmed that when applying the new turnover reduction tests for the September 2020 quarter and December 2020 quarter, entities that are registered for GST must use the same method that is used for GST reporting purposes. That is, if the entity is registered for GST on a cash basis then a cash basis needs to be used to calculate current GST turnover for the purpose of these new tests.
Entities that are not registered for GST can choose whether to calculate GST turnover using a cash or accruals basis, but must use a consistent method.
As with the original JobKeeper rules, the ATO has the power to set out alternative tests where it is not appropriate to compare actual turnover for a quarter in 2020 with the corresponding quarter in 2019. The alternative tests for the additional decline in turnover test are broadly similar to the tests available for the original JobKeeper package. The tests cover for the following areas:
- Where a new business commenced before 1 March 2020 but after the start of the comparison period
- A business making an acquisition or disposal of part of its business that changed the entity’s current GST turnover
- Where there has been a business restructure that changed the entity’s current GST turnover
- A business having a substantial increase in turnover
- A business affected by drought or natural disaster
- Businesses with irregular turnover
- Sole traders or small partnership with individuals affected by sickness, injury or leave
Once it is confirmed the entity is eligible for JobKeeper 2.0, the next issue is determining the eligible employees and/or business participant.
Employees should generally be eligible for JobKeeper payments if they were employed by the entity on 1 July 2020 and can meet all of the other eligibility requirements (such as being a long-term casual if a casual employee, the age requirements, not being an excluded employee e.g., receiving parenting payments or workers compensation). Employees also need to have provided the employer with a nomination notice. If an employee has already passed all the relevant conditions at 1 March 2020, then they don’t need to be retested using the 1 July 2020 test date.
Eligible business participants need to be actively engaged in the business as at 1 March 2020 (the 1 July test date for employees does not apply), they must hold a specific position with the entity in question and must pass a number of other conditions relating to their age, residency status etc.
From 28 September 2020, the JobKeeper payment rate is split into two tiers. The payment rate will generally be based on the hours worked by the individual in the business in the relevant “reference periods”.
For the period 28 September to 3 January 2021 the payment rates are:
- $1,200 per fortnight per employee or business participant who qualifies for the higher payment rate (in broad terms, if they worked at least 80 hours in the reference period); or
- $750 per fortnight per employee or business participant who didn’t qualify for the higher payment rate.
For the period 4 January 2021 to 28 March 2021 the payment rates are:
- $1,000 per fortnight per employee or business participant qualifies for the higher payment rate; or
- $650 per fortnight per employee or business participant who didn’t qualify for the higher payment rate.
The “reference period” for employees is the 28 day period finishing on the last day of the last pay period that ended before either 1 March 2020 or 1 July 2020. For eligible business participants, it is the full month of February 2020. However, some alternative reference periods apply in some cases and some employees will automatically qualify for the higher rate (some employees on commissions and under certain awards).
