On the 7th August 2020 the ATO announced an extension to the JobKeeper payments. This now takes payments through to March 2021 with two qualifying periods. The updated JobKeeper will have different eligibility criteria, however. We have put this information together to guide you through the process.
To qualify for the first extension (28 September 2020 to 3 January 2021), you need to prove a 30% decline from July to September 2020.
To qualify for the second extension (4 January 2021 to 28 March 2021), you need to prove a 30% decline from October to December 2020.
So, that means that if your business recovers for one quarter but declines again, you will still be eligible for the payments for the next period.
If you were newly employed as an employee between 1 March and 1 July 2020, you are now eligible for either JobKeeper extension from your employer. The rate you receive will depend on how many hours you worked in the 2 fortnights before 1 July 2020.
If you are a long-time casual employee, the 12-month period of employment for JobKeeper 2.0 extension will now start from 1 July 2019. The rate you receive will depend on how many hours you worked in the 2 fortnights before 1 July 2020.
Employees that now qualify for JobKeeper payments from 1 July can receive back payments dating from August 3.
Employees who were aged 18 years or older or were an independent 16 or 17 year old not undertaking full time study, at 1 July 2020 are now eligible.
Workers who were forced to switch employers during the uncertainty of the first wave will now qualify for JobKeeper from their new employer.
What hasn’t changed?
Businesses must still prove decline in actual GST revenue of:
- 50% for those with an aggregated turnover of more than $1 billion;
- 30% for those with an aggregated turnover of $1 billion or less; or
- 15% for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities)
How do I prove decline in turnover?
Employers will need to use business activity statements for the relevant quarters to prove their eligibility. BAS for the September quarter are usually submitted in late October. BAS for the December quarter are usually submitted late January. You cannot process JobKeeper payments to employees before you have proved your eligibility as an organisation. Therefore we strongly recommend submitting BAS for both quarters as soon as you can. This way you will have plenty of time to process the first fortnight’s payment.
You will then need to compare the BAS statements for those quarters in 2020 with the same period in 2019 to prove your decline in turnover.
If you are a new business that doesn’t have this information, or the period isn’t comparable for other reasons, there’s no need to panic. The Commissioner of Taxation has the discretion to set alternative tests.
How is JobKeeper taxed?
The amount that you receive as JobKeeper allowance is still taxed at your regular marginal tax rate, as it is regarded as assessable income.
As an Employer if you do not qualify under the updated eligibility criteria the next steps are:
- Advise employees of cessation
- Note there is NO notification required to the ATO.
- Ensure final fortnight payment is paid (prevent future employee Fair Work issues)
- Document it all – write a file note
If you need help and would rather have a professional handle this for you, please feel free to get in touch. You can email Liz initially for a brief discussion regarding your needs or have a look at the ATO website.