RSM Australia

JobKeeper 2.0 legislation passed

Tax Insights

Legislation has been passed by Parliament extending the JobKeeper wage subsidy scheme until 28 March 2021.

The current JobKeeper rules will cease to have effect from 28 September 2020.

Whilst Treasury has released guidance on the proposed rules to take effect from 28 September 2020, the Treasurer must register a legislative instrument setting out the actual rules before they can be implemented.

As the current JobKeeper rules will cease from 28 September 2020, entities who are currently enrolled in the JobKeeper program will have to re-assess eligibility based on the new rules to continue to access JobKeeper payments.

Until the new JobKeeper rules are registered, entities will have to rely on the Treasury guidance setting out the proposed changes.

Given the complexity surrounding the existing rules and the practical difficulties business owners and their advisers experience in complying with compliance and administration, we recommend the following steps be taken in preparation for the end of JobKeeper 1.0

Recommendations:

  • Ensure accounting records are brought up to date to enable timely processing of the relevant  Business Activity Statement (BAS). Until the new JobKeeper rules are registered, entities will have to rely on the Treasury guidance setting out the proposed changes.
  • Review historical payroll records for employees to determine if employees qualify for the $1,200 per fortnight (before tax) JobKeeper rate for full time employees or the reduced $750 per fortnight (before tax) JobKeeper rate for part time employees. 


Business Activity Statement (BAS) preparation

It is proposed the decline in turnover test for eligibility for JobKeeper 2.0 will be based on actual GST turnover as opposed to projected GST turnover and the decline must be satisfied for the July – September 2020 quarter (compared to a relative comparative period eg July – September 2019). 

As the decline in turnover test is proposed to be based on actual GST turnover, the business will need to finalise the BAS for the period ending 30 September 2020 as a matter of urgency in order to satisfy the ongoing requirements to meet the wage condition.


The Commissioner will have discretion to set out alternative tests to assist in determining eligibility where it is not appropriate to compare the actual turnover in a quarter in 2020 with the same quarter in 2019.There is currently no ‘same business’ test in the JobKeeper rules, so an entity that was not in existence, has restructured, or is carrying on the same business in a new entity, will have to apply the alternative test to determine JobKeeper eligibility.

We anticipate the alternative tests will be based on the Commissioner’s existing discretion but updated for the change to actual GST turnover and the quarterly test period.


There is currently no ‘same business’ test in the JobKeeper rules, so an entity that was not in existence, has restructured, or is carrying on the same business in a new entity, will have to apply the alternative test to determine JobKeeper eligibility.

The entity will not be able to compare the actual GST turnover for the ‘same business’ if the new entity lodges it’s BAS under a different ABN.

This is a known issue with the JobKeeper rules, and we will have to wait to see the updated rules to see if the issue will be rectified by Treasury.


Review of payroll records

To determine the JobKeeper rate for the October – December 2020 quarter under the proposed new rules, the entity will need to review the hours worked by an employee in the four weeks preceding 1 March 2020 and/or 1 July 2020 (dependent on the employee reference date).

The review is required to determine if the average number of hours worked in the business in the test period was less than or greater than 20 hours per week.


  • If the employee worked an average equal to or greater than 20 hours per week in the test period, the higher rate of JobKeeper ($1,200) can be claimed in respect of that employee.If the employee worked an average equal to or greater than 20 hours per week in the test period, the higher rate of JobKeeper ($1,200) can be claimed in respect of that employee.
  • Where employees were employed before 1 March 2020 the employer can use either the average hours worked in the four week prior to 1 March 2020, or the four week period prior to 1 July 2020.

Employers will need to wait until the new rules are registered and ATO guidance issued before they are able to update single touch payroll codes (if required) or comply with any new employee notification or enrolment rules.

The Commissioner will also have discretion to allow for an extension to the time an entity has to pay the minimum JobKeeper wage. If entities are required to determine eligibility based on actual GST turnover, this discretion will be essential to allow time for the entity to finalise their BAS and confirm JobKeeper eligibility.


10% decline in turnover certificate for JobKeeper legacy employers

Entities who cease to be eligible for the JobKeeper payment may be eligible to access certain temporary FairWork provisions, however they must satisfy a 10% decline in turnover test and obtain an appropriate 10% decline in turnover certificate from a registered tax agent, registered BAS agent or qualified accountant.

The person providing the 10% decline in turnover certificate must be independent and external to the entity and must not be a director, employee or associated entity. 

Small business owners (less than 15 employees) may be able to obtain a statutory declaration from a person who has knowledge of their financial affairs.What is the 10% decline in turnover certificate for JobKeeper legacy employers?

It is important to note the definition of small business to access the temporary FairWork provisions is not based on the aggregated turnover test for income tax purposes, it is based on the number of employees.

Unfortunately, advisers will not be able to provide clarity around the new rules until the new rules are registered by Treasury and the ATO provide updated guidance, however we anticipate the new rules will be registered soon.

 

How can RSM help?

If you have any JobKeeper 2.0 queries, please contact your local RSM office for assistance specific to your circumstances. Advice in relation to the changes to the FairWork act must be obtained directly from FairWork, or a suitably qualified employment lawyer, or a Human Resources representative.

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