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ATO guidance in respect of JobKeeper 2

The ATO has finally released its guidance for businesses wanting to receive JobKeeper payments beyond 28 September to 28 March 2021.

What remains the same for businesses in JobKeeper 2.0?

Businesses already enrolled for JobKeeper before 28 September 2020 do not need to re-enrol for the JobKeeper extension. Businesses also do not need to reassess employee eligibility or ask employees to agree to be nominated by them as their eligible employer if they are already claiming for them before 28 September 2020.

JobKeeper will also be open to new participants, provided they meet the eligibility requirements for the relevant period.

The relevant JobKeeper extension periods are?

There are two separate extension periods:

  • The first extension period begins from 28 September 2020 to 3 January 2021.
  • The second extension period begins from 4 January 2021 to 28 March 2021.

What payment rates will change for JobKeeper 2.0?

The JobKeeper payment for each extension period will depend on the number of hours an employee works and has been split into two tiers.

The Tier 1 rate applies to employees who worked for 80 hours or more in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, or eligible participants who were actively engaged in the business for 80 hours or more in February and provide a declaration to that effect.

The Tier 2 rate applies to all other eligible employees and business participants. For the period from 28 September 2020 to 3 January 2021, the rates of the JobKeeper payment are:

  • Tier 1: $1,200 per fortnight (before tax)
  • Tier 2: $750 per fortnight (before tax)

For the period from 4 January 2021 to 28 March 2021, the rates of the JobKeeper payment are:

  • Tier 1: $1,000 per fortnight (before tax)
  • Tier 2: $650 per fortnight (before tax)

How does an employee satisfy the 80-hour threshold?

Employees will hit the 80-hour threshold if, in their 28-day reference period, the total of the following is 80 hours or more:

  • Actual hours they worked
  • Hours they were on paid leave
  • Hours they were paid for absence on a public holiday

Full-time employees will very likely hit that threshold, meaning businesses should look more closely at eligible employees who are working part-time, long-term casuals, not paid on an hourly basis or have been stood down.

What is the 28-day reference period?

The ATO has laid out a variety of options businesses can use in determining a 28-day reference period. However, most businesses will likely use either:

  • The pre-March period which is the 28 days which finish on the last day of the last pay cycle that ended before 1 March 2020; or
  • The pre-July period which is the 28 days which finish on the last day of the last pay cycle that ended before 1 July 2020.

In addition, businesses should use the most accurate workplace records to show the actual hours your eligible employees worked in their 28-day reference period, such as payroll data or time sheets.

What decline in turnover test should businesses use?

The decline in turnover test that businesses need to apply depends both on which JobKeeper period the business is applying the test and whether the business is a new or existing participant to the scheme.

For both extension periods, businesses already receiving JobKeeper payments but want to continue receiving payments beyond 28 September 2020 must satisfy the actual decline in turnover test.

For businesses applying for JobKeeper for the first time from 28 September 2020, they, too, must satisfy the actual decline in turnover test.

Businesses satisfying the actual decline in turnover test will automatically satisfy the original decline in turnover test.

How does a business fulfil the actual decline in turnover test?

Businesses can pass the actual decline in turnover test either through using the basic test or the alternative test. Most businesses will likely use the basic test, which is based on GST turnover.

The alternative test should only apply to businesses where the normal comparison period is not appropriate. A common example would be if the business has been operating for less than a year; however, there are other situations where the alternative test would be more appropriate.

In applying the actual decline in turnover test, businesses should note that:

  • It must be done for specific quarters only.
  • They must use actual sales made in the relevant quarter, not projected sales, when working out their GST turnover.
  • They allocate sales to the relevant quarter in the same way they would report those sales to a particular business activity statement if they were registered for GST.

For the first extension period, a business meets the test when current GST turnover for the quarter ending 30 September 2020 (the months of July, August and September) has declined by the specified shortfall percentage in comparison to their current GST turnover for the quarter ending 30 September 2019.

Also for the second extension period, a business meets the test when their current GST turnover for the quarter ending 31 December 2020 (the months of October, November and December) has declined by the specified shortfall percentage in comparison to their current GST turnover for the quarter ending 31 December 2019.

Additional information and details for the JobKeeper extension period can be found here. In addition, the ATO has put out even more detailed guidance on payment ratesthe 80-hour thresholdthe decline in turnover tests and the actual decline in turnover test.

Source:  https://www.ato.gov.au/