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JobKeeper Extension


Legislation and Rules have been passed to implement the JobKeeper extension from 28 September 2020 to 28 March 2021.

Actual decline in turnover test

In addition to the current decline in turnover test, a new ’actual decline in turnover’ test applies.

  • For fortnights from 28 September 2020 to 3 January 2021 (Extension Period 1), the new test must be met for the 30 September 2020 quarter. The new test will be satisfied where the entity’s actual GST turnover has declined by the required percentage for the quarter ending 30 September 2020, relative to its September 2019 quarter.

  • For fortnights from 4 January 2021 to 28 March 2021 (Extension Period 2), the new test must be met for the 31 December 2020 quarter. The new test will be satisfied where the entity’s actual GST turnover has declined by the required percentage for the quarter ending 31 December 2020, relative to its December 2019 quarter.

Effectively, this test will require a business to have had a decline in its actual GST turnover for the September 2020 and/or the December 2020 quarter (as applicable), relative to the actual GST turnover of its comparable quarter in 2019 (being September 2019 and December 2019 respectively), unless an alternative period is determined by the Commissioner.

For the new additional test, the applicable rate of decline in turnover required to qualify for the JobKeeper in the extension periods is determined using the existing rules (i.e. 50% for entities with an aggregated turnover of more than $1 billion and 30% for entities with an aggregated turnover of $1 billion or less).

Please note that in addition to satisfying all the other qualifying conditions, the new actual decline in turnover test must be satisfied separately for Extension Period 1 and Extension Period 2.

Importantly, an entity is not excluded from qualifying for the JobKeeper in Extension Period 2 simply because it did not qualify for the JKP in Extension Period 1 (or even where it did not qualify for the original JobKeeper scheme prior to 28 September 2020). In other words, the new additional test for each period is not contingent on a business having qualified for any, or all, of the earlier periods.

Current GST turnover

For the purposes of the actual decline in turnover test, current GST turnover will be calculated for both quarters based on when the entity would report the supply in a BAS for the relevant period (assuming the supply was a taxable supply and ignoring the fact that the entity may be part of a GST Group). Input-taxed supplies and supplies that are not connected with Australia will not be included in turnover.

If an entity is not registered for GST, they can choose to account for GST for these purposes on either a cash or accruals basis. Otherwise, they must generally use the accounting basis for which they are registered. Specific rules apply to determine the relevant basis where an entity has registered for GST or changed accounting basis during the relevant period. This differs from the current position where a cash basis taxpayer could generally choose to use either the accruals or cash attribution basis. These rules may be summarised as follows:

 

Circumstance

Accounting Method For Test Period

1

Unregistered entity

May choose to account on a cash basis or non-cash basis

2

Always been registered for GST and never changed accounting basis

Must use that same accounting basis

3

Is registered for GST at the beginning of the relevant comparison period (RCP)

Must use the same accounting basis that applied to the entity in the first tax period of the RCP. For example, for the September 2019 comparison period, this would generally be the month of July 2019 for monthly lodgers or the September 2019 quarter for quarterly lodgers.

4

Became registered for GST during the RCP

5

Changed accounting basis during or after the start of the RCP

6

Cancelled GST registration during or after the RCP

7

Registered for GST after the end of the RCP

Must use the same accounting basis that the entity has at the beginning of its turnover test period (i.e. generally the September 2020 quarter or the December 2020 quarter)

Original decline in turnover test

If an entity has not previously enrolled for JobKeeper they are also required to meet the original decline in turnover test. The period this test can be applied has therefore been extended to December 2020.

An entity that meets the actual decline in turnover test for a period would generally be expected to also meet the original decline in turnover test for the same period.

Payment rate

From 28 September 2020, a two-tiered payment rate will apply based on an hours test as follows:

 Hours worked by the individual in the reference period 30 March 2020 to
27 September 2020

28 September 2020 to
3 January 2021

4 January 2021 to
28 March 2021

80+ hours

$1,500
per fortnight

$1,200
per fortnight

$1,000
per fortnight 

< 80 hours

$1,500
per fortnight

$750
per fortnight

 $650
per fortnight

For employees, hours includes actual hours worked as well as paid leave and public holidays. For business participants, this refers to hours of active engagement in the business. Business participants must be able to demonstrate the basis on which they determined they were actively engaged.

Reference periods

There are two standard 28-day reference periods that can be used for employees and, if both apply, the higher number of hours worked is used. The periods comprise the last two consecutive fortnightly pay periods or the last 4 weekly consecutive pay periods, ending:

  • Prior to 1 March 2020; or

  • Prior to 1 July 2020.

For a monthly pay cycle, the hours are pro-rated to determine the hours attributable to the 28 day period.
The standard reference period for business participants is the month of February and is therefore 29 days.
Likewise, eligible religious practitioners have one standard reference period being the month of February 2020.

The ATO has determined alternative reference periods that can be used in certain circumstances which may be summarised as follows:

  Alternative reference period (alternative 28-day period) applies for the employee where:

Alternative reference period for the employee is:

1

Total hours of work or paid leave/absence in the reference period was less than 80 hours — not representative of the employee’s hours in a typical 28-day period

The 28-day period ending at the end of the employee’s most recent pay cycle before 1 March 2020 or 1 July 2020 in which the employee’s total hours of work and paid leave/absence was representative of a typical 28-day period

2

Employee not employed during all or part of the reference period

The first 28-day period ending on or after 1 March 2020 or 1 July 2020 that wholly occurs during consecutive pay cycles

 

3

Employee’s employment started before 1 March 2020 or 1 July 2020 but their first pay cycle ended on or after 1 March 2020 or 1 July 2020

4

Business changed hands and employee treated as having been employed at earlier time, but employee was not employed by the entity for all or part of the reference period (hours worked for previous employer do not count towards 80-hour threshold for new employer)

  Alternative reference period for
Eligible Business Participant (“EBP”) applies where:

Alternative reference period for EBP is:

5

Total hours the EBP was actively engaged in February 2020 was less than 80 hours — not representative of the hours in a typical 29-day period

The most recent 29-day period ending before 1 March 2020 in which any circumstances that caused the number of hours of active engagement not to be representative of the total hours in a typical 29-day period did not exist

6

EBP commenced participation in February 2020 (but after 1 February 2020)

The 29-day period starting on the day the individual first began to be a sole trader, partner, beneficiary, shareholder or director in relation to the entity

7

Entity conducted business in a declared drought zone or declared natural disaster zone during February 2020

The most recent 29-day period (wholly within a calendar month) ending before 1 March 2020 during which the entity did not conduct business in a declared drought zone or declared natural disaster zone

  Alternative reference period for
Eligible Religious Practitioner (“ERP”) applies where:

Alternative reference period for ERP is:

8

Total hours the ERP spent doing activities covered by s 12B(2)(b) in February 2020 was less than 80 hours — not representative of the hours in a typical 29-day period

The most recent 29-day period ending before 1 March 2020 during which the total number of hours doing activities covered by s 12B(2)(b) was representative of the total hours in a typical 29-day period

9

ERP commenced doing activities covered by s 12B(2)(b) in February 2020

The 29-day period starting on the day the ERP first commenced doing activities covered by s 12B(2)(b)

Higher rate determination

Where there are no records or incomplete records of hours, including where remuneration is not tied to hourly or contracted rates (e.g paid on commission), the following alternative methods are available to determine whether an employee qualifies for the higher rate:

  • Wage paid for the reference period was at least $1,500 (excluding amounts paid to meet the ‘wage condition’)

  • Employee was required to work for at least 80 hours under their employment contract or award.

  • Can be determined based on reasonable assumptions that the employee’s hours were 80 or more.

Other requirements

Entities do not need to re-enrol for the scheme, but do need to notify the Australian Taxation Office (“ATO”) of eligible employees or business participants and their payment rate. Business participants will also need to make a declaration if their active engagement exceeds 80 hours. Entities must notify the employee or business participant, within 7 days, of the payment rate that has been advised to the ATO.

The other eligibility requirements remain the same, including meeting the wage condition. Entities will have until 31 October 2020 to meet the wage condition for the fortnights starting 28 September and 12 October. Guidance is also expected on how to calculate the wage condition where different payment rates apply to a pay period.

Let’s Talk

For an in-depth discussion of how these changes might affect you and your business, or for general assistance, please contact us on + 61 3 9527 5041.