On 21 July, the Australian Government announced that it will extend JobKeeper by six months to 28 March 2021. Entities and business participants, including self-employed individuals and not-for-profits, may continue to receive the payment if they meet the eligibility criteria. This article outlines the new 20-hour rule, breaks down some terminology, and directs you to helpful resources to get your head around JobKeeper 2.0.
“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,”Josh Frydenberg, Treasurer
What are the eligibility criteria ?
Entities and business participants will need to demonstrate an ongoing significant decline in GST turnover. Current recipients of JobKeeper will need to reassess their eligibility by referring to their actual, not projected, GST turnover in both the June and September quarters of 2020.
The Australian Taxation Office (ATO) has clarified that eligibility is not affected if you are a sole trader who is not registered for GST. Simply calculate your business turnover in the respective period to demonstrate your eligibility.
To be eligible for JobKeeper payments under this extension, entities and business participants will still need to demonstrate that they are actively engaged in their business and have experienced a decline in turnover of:
- 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).
If your business does not pass the additional turnover tests for the extension period, it does not affect your eligibility prior to 28 September 2020.
Who is an eligible entity and who is an eligible business participant?
If you carried on business on 1 March 2020, and you’ve lodged a 2018 – 2019 income tax return, activity statement, or GST return on or before 12 March 2020, and you satisfy the fall in turnover test, then you will likely be an eligible entity.
Business participants are non-employee individuals, actively engaged in a business on 1 March 2020. Australian residents aged at least 16 years who are sole traders, partners in a partnership, adult beneficiaries in a trust, shareholders or directors in a company, are considered to be business participants. More detailed information about eligibility and ineligibility can be found here.
Your entity cannot have more than one eligible business participant.
Will the payment rate change after September 2020?
The current JobKeeper payment rate $1500 per fortnight. From 28 September 2020 to 3 January 2021, the JobKeeper payment rates will be:
- $1200 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:
- $1000 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.
Businesses will be required to nominate which payment rate they are claiming for each of their eligible employees (or business participants).
A statement published by the Prime Minister insists that “The JobKeeper Payment will continue to remain open to new participants that meet the eligibility requirements.”
The advice in this article is general and by no means exhaustive. It does not take into account your personal circumstances. Please consult a financial professional if you have further questions. Frequently asked questions and their responses can be found here. A detailed fact sheet about JobKeeper is available on the Treasury website here.