By Ross Higgins, Partner 

JobKeeper has been an economic lifeline for more than 960,000 businesses and not-for-profits. It has supported 3.5 million workers.

It is helping Australians get through one of the most difficult times in our history in dealing with the Covid-19 Pandemic.

The existing JobKeeper framework and the Coronavirus Supplement to JobSeeker are due to end on 27 September 2020.  Businesses and employees were concerned about a JobKeeper “cliff” if support ended.

On Tuesday 21 July 2020 the Morrison Government announced that the JobKeeper Payment will be extended by six months to 28 March 2021 and the temporary Coronavirus Supplement for those on income support will be extended by three months until 31 December 2020.

Treasurer Josh Frydenberg said:

“The Government’s focus remains on reopening the economy where it is safe to do so, but the extension of these measures recognises that some parts of the economy will continue to be affected and need continued support. Sadly, as a result of this global health pandemic, businesses will close and people will lose their jobs, but that is why we have extended the Coronavirus Supplement and announced a new skills package to help people transition from welfare to work. It is also why we are extending the JobKeeper Payment beyond September to help keep businesses in business and Australians in jobs as our economy reopens.”

1. JobKeeper

The new announcement does not affect eligibility prior to 28 September 2020. The continuation of JobKeeper for these businesses will help support the economic recovery and provide them with sufficient time to adjust.

As the economy reopens the payment will be tapered in the December and March quarters to encourage businesses to adjust to the new environment, supporting a gradual transition to economic recovery, while ensuring those businesses who most need support continue to receive it.

A two-tiered payment will also be introduced from 28 September, to better align the payment with the incomes of employees before the onset of the COVID-19 pandemic. Employees who were employed for less than 20 hours a week on average in the four weekly pay periods ending before 1 March 2020 will receive the lower payment rate.

1.1 JobKeeper Payment rates from 28 September 2020 to 28 March 2021:

• 28 September 2020 to 3 January 2021: Full rate per fortnight: $1,250 and Less than 20hrs worked per fortnight rate: $750
• 4 January 2021 to 28 March 2021: Full rate per fortnight: $1,000 and Less than 20hrs worked per fortnight rate: $650

The full rate applies for eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average, and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020. Those that worked on average less hours will get the lower rate.

1.2 New Decline in Turnover tests

From 28 September 2020, businesses, and not-for-profits will be required to reassess their eligibility by reference to their actual June and September quarter turnovers to demonstrate that they have suffered an ongoing significant decline in turnover. Organisations will need to demonstrate that they have experienced the relevant decline in turnover in both of those quarters to be eligible for the JobKeeper Payment in the December quarter.

Employers will need to again reassess their eligibility for the JobKeeper Payment for the March quarter. Employers will need to demonstrate that they have met the relevant decline in actual turnover in each of the previous three quarters ending on 31 December 2020 to remain eligible for the JobKeeper Payment in the March quarter 2021.

Generally the comparative periods will be the corresponding quarters in 2019. However, the Commissioner of Taxation will have discretion to set out alternative tests where there are special circumstances.

The extent of the decline in turnover will remain unchanged, being:

• 50 per cent for those with an aggregated turnover of more than $1 billion;
• 30 per cent for those with an aggregated turnover of $1 billion or less; or
• 15 per cent for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities).

Businesses and not-for-profits will generally be able to assess eligibility based on details reported in the Business Activity Statement (BAS) as representing their GST turnover. It needs to be confirmed that the Law Companion Ruling 2020/1 applies equally to the new turnover tests. Alternative arrangements will be put in place for businesses and not-for-profits that are not required to lodge a BAS (for example, if the entity is a member of a GST group).

1.3 Wage Condition

The wage condition requires employers to pay their eligible employees in advance of receiving the JobKeeper payment. As the deadline to lodge a BAS for the September quarter or month is in late October, businesses and not-for-profits will need to assess their eligibility for JobKeeper in advance of the BAS deadline in order to meet the wage condition. The Commissioner of Taxation will have discretion to extend the time an entity has to pay employees in order to meet the wage condition, so that entities have time to first confirm their eligibility for the JobKeeper Payment. The same issue will apply for the BAS for the December 2020 quarter or month.

1.4 Eligible employees

These rules will remain unchanged, including that:

• The employees must have been employed as full-time, part-time or long-term casual employees on 1 March 2020; and
• Only one employer can claim the JobKeeper payment in respect of an employee.

2. Coronavirus Supplement

The payment period of the temporary Coronavirus Supplement has been extended to 31 December 2020.

Eligible income support recipients will:

• Continue to receive the payment at a rate of $550 per fortnight up to and including the period ending 24 September 2020;
• Receive a reduced payment rate of $250 per fortnight for the period from 25 September 2020 to 31 December 2020.

The Treasury fact sheet also outlines the following changes to apply from 25 September 2020:

• Adjusted income taper test. The income free area for the JobSeeker Payment and Youth Allowance (other) will increase to $300 per fortnight for both. Recipients can earn up to $300 per fortnight and still receive the maximum payment rate of the JobSeeker Payment and Youth Allowance (other). The Coronavirus Supplement will remain outside the income testing, meaning anyone eligible will receive the full rate of the Supplement.
• Means testing. Assets testing for all payments will be reinstated for existing and new recipients. The Liquid Assets Waiting Period for all payments will also be reinstated.
• Partner income testing. The partner income test cut-out will increase to $3,086.11 per fortnight, or $80,238.89 per annum, for individuals with no personal income. The taper rate will increase from 25 cents to 27 cents on 25 September 2020 and apply until 31 December 2020. The partner income test taper rate was reduced on 26 April 2020 and was previously 60 cents to the dollar.
• Expanded eligibility criteria. JobSeeker Payment and Youth Allowance (other) criteria will continue to include permanent employees who are stood down or lose their employment and sole traders, the self-employed, casual workers and contract workers who meet the income and assets tests until 31 December 2020.
• Reduced waiting times. The Ordinary Waiting Period, Newly Arrived Resident’s Waiting Period and Seasonal Work Preclusion Period will continue to be waived until 31 December 2020.