RSM Australia

New announcement and changes to JobKeeper 2.0 - What it means for business owners

Tax Insights

The government has today released more detail surrounding much anticipated changes to the JobKeeper program.

In a press conference earlier today, the Prime Minister, the Hon Scott Morrison and the Treasurer, the Hon Josh Frydenberg announced a new and more targeted version of the JobKeeper program will commence from October 2020.

The changes will take effect from 28 September and will be implemented progressively so employers currently receiving the wage subsidy will continue to receive JobKeeper in its current form until the end of September.


The revamped JobKeeper program labelled JobKeeper 2.0 will see some fundamental changes to the program, particularly around eligibility testing and the rate of ‘pay’ required to be paid to eligible employees.

Under the current JobKeeper program, eligible employers were required to satisfy the decline in turnover test once, with the test period limited to either a selected month or relevant quarter.The revamped JobKeeper program labelled JobKeeper 2.0 will see some fundamental changes to the program, particularly around eligibility testing and the rate of ‘pay’ required to be paid to eligible employees.

Whilst eligible employers were required to provide monthly data to the ATO of current and projected turnover, eligibility for the program did not cease if turnover returned to ‘normal’ or increased.


JobKeeper 2.0 're-testing' the decline in turnover test

Under JobKeeper 2.0, eligible employers will need to ‘re-test’ decline in turnover in October and December to ensure ongoing eligibility.

The PM has indicated the new JobKeeper eligibility tests will be based on a comparison of quarterly turnover and will not be limited to a once off test.

To be eligible for ongoing JobKeeper assistance businesses will need to pass the relevant decline in turnover rates as follows:

Eligibility Period

Decline in Turnover Test Period

Conditions

October – December 2020

April – June 2020

July – September 2020

The relevant decline in turnover test must be satisfied in BOTH quarters

January – March 2021

April – June 2020

July – September 2020

October – December 2020

The relevant decline in turnover test must be satisfied in ALL three quarter

 

Testing of ongoing eligibility based on ongoing quarterly turnover will assist Testing of ongoing JobKeeper eligibility based on ongoing quarterly turnover will assist in ensuring integrity in the program and ensuring the program is targeted at those businesses impacted most by COVID-19.in ensuring integrity in the program and ensuring the program is targeted at those businesses impacted most by COVID-19.

This is a welcome change that will help limit the financial burden on the government and Australian taxpayers, but also ensures business owners impacted by COVID-19 are provided with the support to continue to operate and engage their employees until COVID-19 outbreaks are contained and restrictions released.

Want to learn more about the existing government stimulus packages and support programs for business? Visit our Coronavirus Resource Centre for more information.

Whilst the detail of the new eligibility tests is yet to be announced, on the face of it, it appears the proposed changes will assist in ensuring financial support is targeted to industries most impacted by the ongoing effects of COVID-19 restrictions such as hospitality, tourism, entertainment and the airline industry.

The proposed changes will also ensure financial support is directed to businesses in Victoria and New South Wales who have been impacted by an increase in COVID-19 cases and a second round of restrictions.


New JobKeeper minimum wage conditions

The PM also announced changes to the JobKeeper minimum wage condition which will see employees receive support based on their basis of employment as opposed to receiving a flat rate of support.The government has announced JobKeeper 2.0 will have a two tiered approach to the minimum JobKeeper wage.

The government has announced JobKeeper 2.0 will have a two-tiered approach to the minimum JobKeeper wage:

  • one for full-time employees, and;
  • the other for part-time and long term casual employees.

The new rates will be as follows:

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)

* The 20 hour work test is with reference to the month of February 2020 (with some Commissioner discretion)​

This change is welcome as it will address the anomaly where casual or part-time employees were paid a flat rate of $1,500 per fortnight (before tax) irrespective of their usual rate of pay or working hours, or where stood down employees in receipt of JobKeeper support from their primary employer have obtained temporary employment with another employer. 

The gradual ‘weaning off’ of government support will provide businesses with the opportunity to revisit future sustainability and we strongly advise business owners to engage with their advisers to work out a plan for the future, whether that be business growth, business reinvention or business cessation.The Minister for Finance, Mathias Corman had indicated in an earlier press conference that the government was cognisant of the issue where stimulus support packages, such as JobKeeper, were keeping otherwise insolvent companies afloat and this was not the intent of the program.

The Minister for Finance, Mathias Corman had indicated in an earlier press conference that the government was cognisant of the issue where stimulus support packages, such as JobKeeper, were keeping otherwise insolvent companies afloat and this was not the intent of the program.

The proposed changes may be the ‘writing on the wall’ for zombie companies and given the impending changes and ultimate cessation of the program in early 2021, otherwise, insolvent companies may need to give consideration as to whether they continue to reassess eligibility or if they seek advice in relation to voluntary administration or winding up while ASIC concessions surrounding insolvent trading provisions are still in effect.


How can RSM help?

Further detail of the changes is not expected until government resumes in September, however, the announcement made by the government today appears reasonable and equitable and will ensure support is more targeted towards those who most require it.

If you are impacted by the proposed changes to the JobKeeper program and require further guidance please contact your local RSM office.​

 

Registrations now open:

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