RSM Australia

JobKeeper 2.1 - Treasury announces further changes to JobKeeper payment

Tax Insights

In response to the significant impact of coronavirus restrictions on business owners in Victoria, and likely impacts to follow in NSW, Treasury has announced further changes to the JobKeeper V2.0 proposals originally announced in July.

The key changes, which significantly lighten the JobKeeper eligibility decline in the turnover test are summarised in the table below:

Eligibility Period

decline in Turnover Test Period

Conditions

28 September 2020 – 3 January 2021

July – September 2020

Decline in turnover calculated based on actual GST turnover with reference to the relative comparative period in the prior year.

4 January 2021 – 28 March 2021

October – December 2020

Decline in turnover calculated based on actual GST turnover with reference to the relative comparative period in the prior year.

The original proposal would have resulted in a large number of businesses losing JobKeeper eligibility due to improved trading conditions during the April – June 2020 quarter.The announcement by the Treasury is a significant departure from the original proposal which would have required businesses to test a decline in turnover for the quarters, immediately preceding the period of the claim including the April – June 2020 quarter.

The original proposal would have resulted in a large number of businesses losing JobKeeper eligibility due to improved trading conditions during the April – June 2020 quarter.

Businesses will generally be able to test the decline in turnover based on their Business Activity Statement (‘BAS’) for the September 2020 and December 2020 quarters, however with the delayed lodgement due date for the December 2020 BAS, and the requirement to satisfy the new tiered minimum wage condition from 28 September 2020, business owners may find themselves under significant pressure to estimate their BAS figures in both October 2020 and January 2021.

With many businesses (including accounting firms and bookkeepers), in lockdown in Victoria, being able to establish this data in time to satisfy the minimum wage condition may prove challenging where the business does not use a cloud-based accounting system or does not have remote access to accounting information.


The Treasury has also announced proposed changes to JobKeeper employee eligibility with the reference period for assessing employee eligibility extended to 1 July 2020. Employee Eligibility

The Treasury has also announced proposed changes to employee eligibility with the reference period for assessing employee eligibility extended to 1 July 2020. This proposed change is to come into effect from 3 August 2020.

This will be a very welcome announcement for many employees who have changed employment or gained new employment post 1 March 2020 but are now facing uncertainty where their employer has been forced to close their business.  

Employers currently enrolled in the JobKeeper program will need to review employee eligibility to ensure any ‘new’ employees that satisfy the eligibility criteria on 3 August 2020 are provided with a JobKeeper nomination form, and the JobKeeper minimum wage condition is satisfied for these employees for the August 2020 JobKeeper fortnights.

Two-tiered JobKeeper payment rate

The proposed change to introduce a two-tiered payment to reduce cashflow pressure on employers currently required to make ‘top-up’ payments to employees (i.e. employees who typically earn less than the JobKeeper minimum wage condition of $1,500 per fortnight (before tax)), will not commence until 28 September 2020. 

A proposed two-tiered system will result in a lower rate of JobKeeper payment being paid in respect of employees who work less than 20 hours per week in the two JobKeeper fortnights preceding the relevant employment date. 

Eligibility Period

Employee working >20 hrs per week*

Employee working <20 hrs per week*

28 September 2020 – 3 January 2021

$1,200 pf (before tax)

$750 pf (before tax)

4 January 2021 – 28 March 2021

$1,000 pf (before tax)

$650 pf (before tax)

* Tested based on the 2 JobKeeper fortnights immediately preceding the relevant employment date of either 1 March 2020 or 1 July 2020.


Employers eligible for JobKeeper payment are required to fund the JobKeeper minimum wage condition up front and are reimbursed in arrears by the ATO.This means employers who have engaged new employees or have existing employees who now satisfy the long-term casual employment requirement during the period 1 March 2020 to 1 July 2020 may face additional cashflow pressure in the short term.

Employers eligible for JobKeeper payment are required to fund the JobKeeper minimum wage condition upfront and are reimbursed in arrears by the ATO.

With the change to the employee eligibility reference date, the test period for the reduced JobKeeper payment rate post 28 September 2020 will be the four-weekly pay periods before the reference period – that is either the four-weekly pay periods before 1 March 2020, or the four-weekly pay periods before 1 July 2020.

Businesses and advisers are cautioned the proposed changes announced by the Treasury will not come into effect until such time legislation is passed by Parliament, or a legislative instrument is registered and as such, may be subject to further change.


How can RSM help?

If you require advice on JobKeeper eligibility for your business and how the proposed changes may impact your employees or your business, please reach out to your local RSM office.


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