JobKeeper 2.0: New Changes and Why Businesses Should Be Cautious
The Government recently announced an extension of the JobKeeper scheme which will continue to run till 28 March 2021 with a number of key changes. So, what are these changes and what does this mean for your business?
Changes to Payments
From 28 September this year, the scheme will be rolled back and broken down into two tiers based on hours employees worked in February 2020.
Tier 1: 28 September 2020 – 3 January 2021
In tier 1, employees who worked over 20 hours in February 2020 will receive a $1,200 payment per fortnight until 3 January 2021. Those who worked less than this will receive $750 a fortnight until this date.
Tier 2: 4 January 2021 – 28 March 2021
In the second tier, employees who worked over 20 hours in February 2020 will receive a reduced payment of $1,000 per fortnight while those working less than the 20 hours will receive a $650 payment.
Changes to JobKeeper Eligibility
Employee eligibility remains largely unchanged meaning only those employed by the business working either permanent full time or part-time employee or as a long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at the date of 1 March 2020, will be eligible.
More significantly, businesses currently on JobKeeper will need to be re-tested at the end of September for their eligibility and will be assessed on a continuous quarterly basis.
Those with an aggregate turnover of $1 billion or less currently will be required to prove a 30 to 50 per cent fall in turnover sustained over multiple quarters.
This essentially means those wishing to qualify for the scheme in the first tier (28 September 2020-3 January 2021) will need to prove the June and September 2020 quarters fell by at least 30% compared to the same periods in 2019.
For those hoping to receive payments in the second tier (4 January 2021- 28 March 2021), they will need to show a relevant drop in the June, September and December 2020 quarters compared to that in 2019 to qualify.
This differs from the previous scheme where businesses only needed to prove a decline in turnover test in one of the months or quarters. This may result in businesses losing the subsidy permanently if they begin to recover even, if further lock downs are introduced.
Businesses with aggregate turnover of over 1 billion dollars will be required to prove a 50 per cent reduction in the relevant quarters whilst ACNC registered charities will only need to prove a 15 per cent reduction.
The Commissioner of Taxation also has the discretion to set out an alternative tests to establish eligibility in circumstances where it would not be appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019.
The Dangers of JobKeeper 2.0
Businesses continuing to receive the wage subsidy should be aware of employer liabilities stemming from redundancy and other termination procedures should the business not financially recover requiring them to let go of staff.
Further, those employees who have been kept on the books may have been accruing annual leave and other entitlements which must be paid out.