Jobkeeper is changing, and that change is happening at the end of this week (27th of September 2020). The first Jobkeeper rules were complicated, and the situation was unprecedented. Even though we are seemingly used to grants and incentives to keep our country afloat, it would be unwise to be complacent. The ATO has said since the start of the program that significant penalties and interest will apply on wrongfully gained cash grants or Jobkeeper payments. Audits and reviews will become increasingly frequent in the coming months, therefore it is critical that you remain compliant with the scheme at all times.
Before we get into the detail of what has changed, see below a list of some of the key changes and pieces of information:
- Current Flat Rate of $1500 per fortnight expires on 27th of September 2020
- Extension Period 1 (EP1) from 28th September 2020 to 3rd January 2021
- Extension Period 2 (EP2) from 4th January 2021 to 28th March 2021
- Must demonstrate actual GST turnover drop of specified rate for EACH extension
- Implementation of two rates based on average hours of work pre-Jobkeeper
- Over 20 hours a week on average pre-Covid (Class 1)
- Under 20 hours a week on average pre-Covid (Class 2)
- EP1 Rates are $1200 per fortnight (Class 1) and $750 per fortnight (Class 2)
- EP2 Rates are $1000 per fortnight (Class 1) and $650 per fortnight (Class 2)
- Introduction of ‘Legacy Employers’
As you can see, ‘Extension Periods’ are what the ATO is calling the next Jobkeeper payments. In short, the Jobkeeper scheme ends on the 27th of September 2020, however, if you can show an actual GST turnover drop of 30-50% (depending on turnover) in the September quarter (when compared to the same period in 2019), you will qualify for Extension Period 1 (dates above). Similarly, if you are able to show the same drop in GST turnover from the December quarter (again, compared to the same time in 2019), you will qualify for Extension Period 2.
Another significant change is the implementation of tiered rates. The original Jobkeeper payment was $1500 per fortnight. If you qualify for extension period 1 or 2, the rates have dropped (shown above). It is vital that employers do not pay employees on Jobkeeper the original $1500 per fortnight (unless they have worked these hours) after the 27th of September, as it will NOT be reimbursed.
So, who qualifies for the higher and lower rates? Simply put, the abovementioned ‘Class 1’ rates, are payable to any employee enrolled in Jobkeeper that worked more than 80 hours over the 28-day reference period. Any employee that is enrolled in Jobkeeper who worked under 80 hours in that same period, is eligible only for the Class 2 rate. The reference period depends on the employee. If they were enrolled in Jobkeeper because they met the employment conditions as of the 1st of March (eg. Worked as a casual for 12 months before 1st March), the reference period is the 28 days preceding the 1st of March. If employees were nominated to Jobkeeper based on the recent 1st of July reference period expansion, the reference period is the 28 days prior to the 1st of July.
Jobkeeper is complicated, even accountants and tax agents are struggling to keep up with the requirements and rules. It is essential that you speak to a qualified tax professional when assessing eligibility for Jobkeeper, and how to actually make the payments.