Last night the Federal Government announced that the JobKeeper program will be extended until 28th March 2021. The aim of the JobKeeper extension is to support those businesses that continue to be affected by COVID-19. Consequently there are a number of changes to the current JobKeeper arrangement which expires on 27th September 2020.
What is the existing JobKeeper program?
Under the current JobKeeper program, businesses can receive payments of $1500 per eligible employee per fortnight if they have suffered a reduction in turnover of 30% or more by comparing to the same period last year. Once a business qualifies they remain eligible to receive the payments until 27th September 2020 regardless of whether their business shows signs of recovery. This part of the JobKeeper program will remain unchanged. More details of the current JobKeeper Program can be found here.
What is JobKeeper 2.0?
From 28th September 2020 the Federal Government will enact JobKeeper 2.0 which has a number of variations to the current program:
Change in JobKeeper payment rates
JobKeeper 2.0 will introduce a two-tier payment rate which is based on the hours an employee worked in February 2020.
- Tier 1: $1,200 per fortnight for all eligible employees who were working 20 hours or more on average per week during the four weeks before 1 March 2020; and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in that period; and
- Tier 2: $750 per fortnight for all other eligible employees and business participants
Phase 2: From 4 January 2021 – 28 March 2021:
- Tier 1: $1,000 per fortnight for all eligible employees who were working 20 hours or more on average per week during the four weeks before 1 March 2020; and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in that period; and
- Tier 2: $650 per fortnight for all other eligible employees and business participants.
What about sole traders? As a sole trader is classed as a business participant, it is anticipated that sole traders will also be be subject to the 20 hour rule.
Change in JobKeeper eligibility
Unlike the current system, eligible businesses will be required to reassess their eligibility during the program and will be unable to receive JobKeeper payments when they no longer satisfy the 30% decrease in turnover (for those with an aggregated turnover of $1b or less).
- Businesses and not-for-profits will be required to demonstrate that their actual GST turnover has significantly fallen in both June and September 2020 quarters relative to the corresponding quarters in 2019.
Phase 2: From 4 January 2021 – 28 March 2021:
- Businesses and not-for-profits will be required to demonstrate that their actual GST turnover has significantly fallen in all of the June, September and December 2020 quarters relative to the corresponding quarters in 2019.
As with the current JobKeeper Program, the Commisioner of Taxation will have discretion to set out alternative tests and we will keep you updated of further developments as they are released.
What about the JobSeeker program?
The Federal Government also announced an extension to the JobSeeker benefit. The program will reintroduce obligations for the payment recipient to seek work, and there are further restrictions to eligibility.
JobSeeker payment rates
From 25th September 2020, the $550 per fortnight coronavirus supplement will be reduced to $250 bringing the JobSeeker payment rate down from $1100 to $800 per fortnight. The supplement will cease on 31st December 2020. The Government however will increase the income threshold to people on JobSeeker to $300, which means you can earn up to $300 per fortnight before your JobSeeker payment will be affected.
JobSeeker eligibility changes
Means testing will be reinstated from 25th September 2020 for new and existing recipients. This will include asset testing and the Liquid Assets Waiting Period (LAWP).
For individuals with no income, the partner income test cut-out will increase to $80,238.89 per annum from 25th September 2020 and the taper rate will increase from 25 cents to 27 cents. As a result no one will be worse off under these temporary changes.
From 4th August 2020 those seeking employment will need to undertake four job searches a month and penalties will apply if people refuse a job that has been provided and offered through that process.
The fine details of the JobKeeper program are not yet released however we will continue to monitor the announcements issued from the Treasury to keep you up to date with the details and how they may apply to your business. If you have any questions, feel free to speak to one of the Care Accounting team on 02 9970 7186.