Government COVID support extended for businesses till March 2021
JobKeeper 1.0 (JK 1) ended on 27th September and is replaced by JobKeeper 2 (JK 2), which is divided into two parts – Extension 1 runs from 28 September 2020 to 3 January 2021 and Extension 2 runs from 4 January 2021 to 28 March 2021.
There are actions required now to determine your eligibility for Extension 1, even if you previously qualified for JK 1. You do not have to re-enrol if you were already enrolled under JK 1.
If you were not registered for JK 1, you will need to enrol before you can start claiming JK 2 payments. To claim the JK payment for a fortnight you must enrol before the end of the month in which the fortnight ends.
You enrol via the ATOs Business Portal using myGovID or your Tax Agent or BAS Agent can enrol you. Contact us if you need help enrolling.
Decline in Turnover Test
- You will need to demonstrate that you satisfy the actual decline in turnover for the September 2020 quarter (businesses on monthly BAS lodgements need to add the 3 months together) relative to a comparable period, generally the quarter ended 30 September 2019
- Specified decline in turnover to be eligible for JK 2 is as follows:
- If aggregated turnover equal to or less than $1B – at least 30% decline
- If aggregated turnover greater than $1B – at least 50% decline
- ACNC registered charities – at least 15% decline
- Things to note:
- For JK2, you need to work out the entity’s actual GST Turnover for the turnover test period, unlike JK1 where projected turnover was used. This means things like the proceeds received for the sale of assets will be included in the new turnover test, whereas they would have been excluded under JK 1
- Under JK 2 rules, you must use the same accounting method (cash or accruals) for both comparison periods, which is different to JK1 where you could use a different method
- Consider the alternate tests if the basic test is failed
- If you haven’t lodged your September 2019 BAS, you will not be able to claim JK 2, Extension 1
Keep your Employees Informed
- Some employers will know they are not eligible for JK 2 as they will fail the decline in turnover test, others may not be sure and yet others will know they are definitely eligible for JK 2. However, it is important to keep your employees up to date, as the JK rates are changing regardless (Tier 1 $1,200 per fortnight; Tier 2 $750 per fortnight and $Nil for those businesses who no longer qualify)
- If you are unsure whether you are going to qualify for JK 2 and you have pay fortnights falling in late September or early October (Fortnights 14 & 15) , the ATO is allowing those payments to be made as late as October 31st, allowing businesses time to make sure they are eligible
New JobKeeper Rates – who is eligible for what?
- Employee eligibility conditions apply, including were they an employee as of 1 March or 1 July 2020 (note, some employees that were previously ineligible may now meet the criteria).
- Does a Tier 1 or Tier 2 rate apply? It is important to note a different rate may apply for the various eligible employee and each employee needs to be tested to determine the applicable rate
- Tier 1 ($1,200 per fortnight) is paid to those eligible employees who worked 80 hours or more in their normal pay cycles covering a 28-day period ending with the most recent pay cycle before either 1 July or 1 March 2020. Therefore, the relevant period is likely to fall in either June 2020 or February 2020
- Tier 2 ($750 per fortnight) is paid to those eligible employees who worked less than 80 hours worked out with reference to the same 28-day period as for Tier 1
- There are alternate tests which may be applied if those periods are not representative of a normal 28-day period, or where it is unable to be ascertained how many hours an employee worked during the 28-day period
- Once the appropriate Tier has been ascertained, you must update your payroll software to reflect the changes, applying the appropriate Tier to each employee, or removing them from JK altogether.
- Payments made to eligible employees must be included in your STP Pay Event
- Eligible Business Participants
- The same 80-hour test applies to Eligible Business Participants to determine the relevant JK 2 Tier and must be notified to the ATO
Ongoing Obligations
- As with JK 1, monthly declarations (by the 14th of each month) will need to be lodged with the ATO and those for October and January will include restating they meet the new Decline in Turnover Test
- Other – a reminder that as for JK 1, JK2 operates on the one employee in, all in principle. You cannot pick and choose.
TIP
If you don’t qualify for JK 2 Extension 1, you may still qualify for Extension 2. Therefore, it’s a good idea to make sure your December 2019 BAS has been lodged and you keep your records up to date for the December 2020 quarter to easily ascertain if you meet the eligibility requirements for Extension 2.
Confused? Not sure how to apply the various tests? Need help with updating your payroll settings? Let Integrity Impressions take the stress out of managing JobKeeper 2 for you and your business.
