September 23, 2020
Australia extends JobKeeper program to March 2021
The Australian Treasurer has released rules to extend JobKeeper (JKP 2) to 28 March 2021 with changes to payment rates and certain eligibility tests.1
The JobKeeper Payments wage subsidy scheme, enacted in April 2020, is designed to assist businesses, not-for profit entities and charities impacted by the Coronavirus (COVID-19) to continue to operate and pay their employees. The payment is also available to the self-employed and some other businesses without direct employees.
As implemented, affected employers were able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of six months. The first payment was received from the Australian Taxation Office (ATO) in the first week of May. The program is now extended to March 2021.
The key features of JKP 2 in comparison to the current JobKeeper are defined in the table below.
Essential information: Frequently Asked Questions (FAQs)
Employer is already in JobKeeper – How do I apply for JKP 2 from 28 September?
You do not need to re-enroll with the Australian Taxation Office (ATO) for JKP 2 if you are already enrolled for JobKeeper for fortnights before 28 September.
However, businesses must have information to demonstrate that the actual fall in turnover test is passed for the September quarter before completing the November monthly declaration.
The Employer must notify the ATO (via the ATO Portal) of each employee's wage rate. The Portal may link to Single Touch Payroll (STP) reporting in the same way that reporting of employees eligible for top-up payments has occurred to date. We expect further information to be released if STP updates are required to payroll systems.
What are the key dates to claim JKP2?
Employers need to notify the ATO of the applicable rate for each employee and submit October claims between 1 November and 14 November 2020.
What are the key actions and dates in relation to employees?
There is no requirement to obtain new nomination notices.
The main requirement is to test the hours of work in accordance with the new 80-hour test. The 80-hour test determines whether an employee is entitled to the Tier 1 or Tier 2 rate.
Employees must be notified of the relevant rate within seven days of notifying the ATO.
How do employers apply the 80hour test?
If at least 80 hours of work or paid leave occurred in either reference period, the higher (Tier 1) rate applies. The reference periods are the 28 days ending at the end of the last pay cycle before 1 March and 1 July 2020.
The ATO has provided alternative tests where the reference periods are not representative of the employee's usual hours.
Employers are required to apply the alternative tests if it is more favorable for the employee.
Do I need to test hours in both February and June?
Yes. However, if the employee meets the 80-hour test in one period, you do not need to test the other period.
Employer is in JobKeeper but does not qualify for JKP 2 – is there anything I need to do?
While not required, it would be prudent to inform your employees that you are not eligible for 28 September 2020 to 3 January 2021.
We also recommend monitoring your December 2020 quarter turnover as it may be possible to re-qualify.
If turnover declines by at least 10% in the relevant quarter, obtain a certificate to retain certain Fair Work flexibilities. See Fair Work Act section below.
Employer first time eligible based on September actual turnover – How do I apply for JKP 2?
The employer must complete an ATO online enrollment form by 31 October 2020. This involves providing turnover details and the expected number of eligible employees.
The employer must confirm each employee's eligibility, obtain employee nomination notices and pay the relevant wage amount. Nomination notices should be obtained in advance of paying additional top-up amounts.
Which decline in turnover rate to apply
The percentage decline in turnover has not changed and is:
In assessing the $1bn aggregated turnover, employers need to consider both the current income year and the prior income year.
The commencement of a new financial year may change the outcome for the employer. For example, as 30 June employers have now moved into a new income year, in assessing which decline in turnover test to apply, it is now necessary to consider the current 30 June 2021 year and FY20 (the immediately prior year) while previously FY20 and FY19 would have been examined.
Actual decline in turnover test
The actual decline in turnover is based on current turnover made in the September and December quarters. This means the use of forecasts drops away and you now need to wait until the end of the September and December quarters to make the necessary assessment.
Some key points to note:
Fair Work Act
Employers who are eligible for JKP 2 from 28 September 2020 (qualifying employers) generally retain access to the current JobKeeper flexibility measures apart from annual leave agreements.
Employers who claimed JobKeeper prior to 28 September 2020, but do not qualify for JKP 2 (legacy employers) may be eligible to access a modified and reduced range of Fair Work flexibility measures.
The legacy employer must have a certificate stating that they have experienced a 10% decline in turnover at the time of issuing the JobKeeper enabling directions or agreements.
Legacy employers' 10% decline in turnover test
The decline in turnover test mirrors the JKP test with some modifications:
Certificate for 10% decline in turnover
Legacy employers must obtain the certificate for each quarter other than where an exception for small businesses applies (broadly an employer with fewer than 15 employees), who can instead choose to make a statutory declaration that they meet the test.
A 10% decline in turnover certificate can only be issued by one of the following:
JobKeeper enabling directions provide legacy employers with important flexibilities
Legacy employers will be able to issue or seek JobKeeper enabling directions or agreements. However, these will be more limited than employers who continue to be eligible for JKP 2 (qualifying employers). In summary the flexibilities include the ability to issue:
A new reasonableness requirement will apply (to both legacy employers and qualifying employers) in relation to JobKeeper enabling directions.
There are also specific consultation requirements that a legacy employer must comply with.
If a legacy employer does not hold a certificate for the relevant quarter, any JobKeeper enabling direction will cease to have effect immediately after the relevant test time, being 28 October 2020 or 28 February 2021.
1 Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 8) 2020.
2 Currency references in this Alert are to the AU$.
3 The Australian Taxation Office (ATO) is expected to provide alternative periods to test where the comparison in the rules is not appropriate.
4 The ATO has provided alternative 80-hour tests for atypical working months.
For additional information with respect to this Alert, please contact the following:
Ernst & Young (Australia), Sydney
Ernst & Young (Australia), Perth
Ernst & Young (Australia), Melbourne
Ernst & Young LLP (United States), Australian Tax Desk, New York
Ernst & Young LLP (United Kingdom), Australian Tax Desk, London
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