Tag: JobKeeper

The Extension and Modification of JobKeeper

Today, the Prime Minister announced the extension and watering down of the wage subsidy, JobKeeper  

Points to note: 

  • Existing JobKeeper continues up until 27 September 2020 
  • From the next day, a new, modified JobKeeper scheme applies until 28 March 2021 
  • Under the new scheme, employers must reassess their eligibility with reference to actual turnover in the June and September quarters (2020) compared to the same period in 2019. That is: 

 

    • from 28 September 2020, businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the June and September quarters 2020.  They will need to demonstrate that they have met the relevant decline in turnover test in both of those quarters to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021. 
    • from 4 January 2021, businesses and not-for-profits will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in each of the June, September and December quarters 2020 to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021 

 

  • Monthly lodgers will use the aggregate turnover for the three-monthly Activity Statements over these quarters, and compare them to the above periods in 2019 
  • The existing decline in turnover rates must be met (i.e. 30% for businesses with a turnover of $1 billion or less, or 15% for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities) 
  • Reduced payment rates will also apply for all eligible employees and business participants.as follows: 

 

  • From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be: 

 

  • $1,200 per fortnight for all 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; and 

 

  • $750 per fortnight for other eligible employees and business participants. 

 

  • From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be: 

 

  • $1,000 per fortnight for all 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 business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and 

 

  • $650 per fortnight for other eligible employees and business participants. 

Evidencing Your Decline in Turnover for JobKeeper

To qualify, an employer must demonstrate that its GST turnover has fallen by the following percentage compared to the same comparison period in 2019: 

  • 30% fall in turnover (for an aggregated turnover of $1 billion or less) 
  • 50% fall in turnover (for an aggregated turnover of more than $1 billion), or 
  • 15% fall in turnover (for ACNC-registered charities other than universities and schools). 

You will need to keep evidence and sufficient records to demonstrate how you calculated your projected GST turnover during the 2020 turnover test period, and your basis for estimating that it would fall by the required percentage. 

Your projected GST turnover during the 2020 turnover test period is the sum of the value (GST exclusive sale price) of all the sales you have made, or are likely to make during that period. 

For the purpose of determining sales likely to be made, the ATO will accept a calculation based on a genuine business plan, accounting budget or some other reasonable estimate based on the evidence about the projected facts and circumstances for the remainder of the turnover test period. 

Relevant evidence that would support a prediction of sales likely to be made may include: 

  • a decline in sales during the turnover test period or since 1 March 2020 as a result of government COVID-19 restrictions 
  • customers cancelling or modifying existing contracts for sales on or from 1 March 2020 
  • being required to close or pausing the business due to government COVID-19 restrictions 
  • delays in being able to get access to trading stock sourced from overseas on or from 1 March 2020 
  • evidence of your business’s reliance on tourism 
  • any consequential effect on the price of what you supply, for example, the effect on the market value of new property being sold by a developer 
  • information known to the business, whether or not publicly available 
  • economic forecasts undertaken by a reputable organisation that are relevant to your type of business 
  • the likely timing of government COVID-19 restrictions being lifted for your type of business based on government announcements. 

According to the ATO, when people make a good-faith estimate to comply and a good-faith decision that   they’re eligible, the Commissioner will be very understanding and sympathetic to their position, particularly where they have passed the benefit of the JobKeeper payment to their employees What the legislation, and the ATO are asking of businesses is to make a “good faith effort”. When the ATO considers a good faith effort has been made, even if it’s slightly wrong (i.e. less than the required downturn percentage), the ATO will not seek repayments of JobKeeper or apply penalties. 

 

 

JobKeeper Payment Rules Released 10/4/20

Late on Friday April 10, explanatory materials were released in relation to the JobKeeper payment that has now been passed into law. The explanatory material clarifies one key aspect of the new legislation:

Establishing a downturn

 

By way of background, to qualify for the JobKeeper wage subsidy, one of the eligibility criteria is that:

  • for businesses that have an annual aggregated turnover of less than $1 billion, they estimate their GST turnover has fallen or will likely fall by 30% or more or
  • for businesses that have an annual aggregated turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more), they estimate their GST turnover has fallen or will likely fall by 50% or more.

Treasury has revealed that the comparison period is for either (a) any monthly period from April 2020 to the end of September 2020 or (b) any quarterly period from April to June or July to September…compared to the same monthly or quarterly period in 2019.

Importantly, once this test is met for either (a) a monthly period or (b) any quarterly period, there is no requirement to re-test in later months or quarters. For example, if a business assesses that its turnover will fall by 30% in April 2020 compared to April 2019…then it retains its eligibility until the JobKeeper payments stop for all businesses at the end of September 2020. This is irrespective of its turnover in the months subsequent to April 2020. It is not required to estimate or determine turnover for subsequent periods.

Where an entity does not qualify in the month of April 2020, for example, or the April to June quarter, it can re-test in later months or quarters, but will only be eligible for the JobKeeper payments from the period of qualification onwards (the payment won’t be backdated to the commencement of scheme).

Alternative tests

The explanatory material acknowledges that comparing monthly or quarterly periods from April 2020 and onwards, to April 2019 and onwards, may not always be possible or made lead to unfair outcomes. To this end, where the ATO is satisfied that there is no such comparison period in 2019, or there is not an appropriate relevant comparison period, the ATO Commissioner may, by legislative instrument, determine an alternative decline in turnover test.

The two alternative test examples cited in the explanatory materials relate to:

  • businesses that were not in existence for the whole of the comparison period in 2019. In the explanatory materials, the business is permitted to average its actual turnover from October 2019 when it came into existence to March 2020, and compare that average it to its estimated turnover in April 2020.
  • businesses that were impacted by a natural disaster during the 2019 comparison period. In the explanatory materials, the business is permitted to go back to 2017 (the most recent year when its turnover was not impacted by drought) and compare its turnover to the same eligible period in 2020.

The Commissioner retains flexibility to apply other alternative tests and take into account other unique circumstances (aside from natural disaster and start-up businesses) confronted by a business, should the 2019 comparison period not be reflective of typical turnover. Treasury, in a separate fact sheet Supporting Business to Retain Jobs, has stated that these alternative tests may include, for example, eligibility being established as soon as a business ceases or where a business significantly curtails its operations.

Businesses and their advisors should contact the ATO where they believe they warrant special consideration in this regard.

 

JobKeeper Payment – Fresh Guidance on Establishing a Downturn

We’ve received many questions from subscribers around how a “downturn of turnover” will be measured for the purposes of eligibility for the coronavirus-related Job Keeper Payment.

Last night there was fresh guidance from Treasury. 

By way of background, one of the eligibility criteria for Job Keeper is that: 

• for businesses that have an annual turnover of less than $1 billion, they estimate their turnover has fallen or will likely fall by 30% or more; or  
• for businesses that have an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more) they estimate their turnover has fallen or will likely fall by 50% or more; and  
• the business is not subject to the Major Bank Levy. 

Treasury has indicated that the decline in turnover test is linked to the GST turnover test in particular the projected GST turnover – which will take into account anticipated decline in revenue. The test requires a business to measure its projected GST turnover and compare this to what is termed a relevant comparison period. If this equals or exceeds the following thresholds, the entity satisfied the decline in turnover test: 
• ACNC-registered charities – 15%; 
• entities with turnover less than $1bn – 30%; 
• entities with turnover greater than $1bn – 50%. 
There is scope for the ATO to apply an alternative test to different classes of entities. 
The turnover test period must be a calendar month that ends after 30 March 2020 and before 1 October 2020, or a quarter that starts on 1 April or 1 July 2020. The relevant comparison period must be the period in 2019 that corresponds to this turnover test period. 
Further ATO guidance will be forthcoming 
The turnover numbers must be reported to the ATO before any payments will start, though there is a transitional rule for the first 2 JobKeeper fortnights. 
The key take-away points are while, at this stage, this is Treasury guidance: 

• the test/comparison period vis-à-vis 2019 to 2020– spans from April to the end of September 
• if 2019 is not representative of typical turnover, another comparison period may be considered 
• the ATO is willing to exercise its discretion where there are anomalous cases.