In Covid world, economic circumstances can change quickly, this forcing the Government to extend the JobKeeper program to beyond the original 27 September 2020.
The first changes to the JobKeeper program were announced in late July (i.e. JobKeeper 2.0), and before we could get a new release out, they changed again around 2 weeks later on 7 August 2020, i.e. this update known as JobKeeper 2.1. JobKeeper 2.1 was released as a direct result of the worsening economic conditions in Victoria due to its Covid “second wave” and resulting lockdowns.
We knew we were safe to advise on 2.1. when, on 15 August 2020, the Government passed the legislation for these new rules, extending the JobKeeper Payment until 28 March 2021. The extra payments will be:
- subject to further decline in turnover tests for a business;
- would be paid at reduced rates;
- there may possibly be an extension of the deadline for a business to pay employees to satisfy the wage condition; and
- other issues relating to the wage condition and eligibility of individuals.
This release also covers:
- The expansion of eligibility for employees who are hired by 1 July 2020;
- The third round of Victorian Government Business Support Grant supplementing the JobKeeper program; and
- The Victorian Business Survival and Adaptation Package.
- Business Eligibility
In order for businesses to receive further payments they will need to demonstrate that they have met the relevant continuing decline in turnover tests to be eligible for JobKeeper for each preceding quarter.
- December 2020 Quarter Test
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 September 2020 quarter. They will need to demonstrate that they have met the relevant decline in turnover test during this quarter to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021.
This is different from JobKeeper 1.0 in that projected turnovers are no longer allowed and monthly turnovers are no longer considered. We also note that the alternative tests for JobKeeper 2.0 are at the moment unchanged.
The threshold rate for the decline in turnover continues to be set at 30% for businesses with an aggregated turnover of $1 billion or less. Businesses with an aggregated turnover of over $1 billion has a turnover threshold of 50%.
- March 2021 Quarter Test
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 the December 2020 quarter to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021.
- Reduced JobKeeper Payments
The JobKeeper payment rates will be reduced for both the December 2020 and March 2021 quarters.
- December 2020 Payment Rates
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 two fortnightly pay periods
before 1 March 2020 or 1 July 2020, were working in the business or not-for-profit for 20 hours or more a week on average, and for eligible business participants (e.g. if business as no employees) 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 (i.e. those working less than 20 hours or more a week on average).
- March 2021 Payment Rates
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 two fortnightly pay periods
before 1 March 2020 or 1 July 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.
- Wage Condition Deadline
Given the possibility that it may take an amount of time for a business to assess their eligibility for JobKeeper, they could be put them in a position that they have assessed that they are eligible to the JobKeeper payment AFTER the end of a particular JobKeeper fortnight (e.g. the fortnight ending 11 October 2020) and would be in a position where they haven’t yet paid each eligible employee the JobKeeper amount.
The ATO will have discretion to extend the time an entity has to pay employees in order to meet the wage condition, so that entities have time to first confirm their eligibility for the JobKeeper Payment.
- Issue relating to the wage condition and eligibility of individuals
The most notable coming out of JobKeeper 2.1 are:
- 20 hours per week for “eligible business participants” (EBPs) – how will the “20 hours per week on average for EPBs without payroll records? Under 2.1, the partial rate of $750 (from 28 September) and $650 (from 4 January) will apply where the individual was actively engaged for less than 20 hours per week on average. The term “actively engaged” is not defined under the JobKeeper rules and has never had to be measured this precisely; and
- New employees who have previously nominated with a former employer – There is a restriction in the JobKeeper rules about preventing an individual from being an eligible employee if they have given a nomination notice to another entity, or the ATO will prevent new employees (i.e. employed since 1 March 2020) from being eligible where they have previously nominated with a former employer. It is clear this rule was designed to prevent two employers claiming JobKeeper for the same individual for the same employee at the same time.
However, there cannot be a risk of ‘double dipping’ in this case as the previous employer is unable to continue to claim JobKeeper for an employee who has been terminated. The policy intent to include more employees in JobKeeper based on a later employment date of 1 July 2020 will be very limited unless this rule is amended.
- The expansion of eligibility for employees who are hired by 1 July 2020
From the fortnight beginning 3 August 2020, any employees who are hired by 1 July 2020 (was previously 1 March 2020) and meet the previous JobKeeper nomination requirements, will also be eligible to receive the JobKeeper payment.
- Third Round - Victorian Government Business Support Grant
To support businesses impacted by Covid-19 restrictions, a third round of one-off grants will be made available to eligible businesses under the Business Support Fund – Expansion program.
The amount of the one-off grant will be from $10,000 to $20,000 for employing businesses in Victoria.
This grant is designed to supplement the JobKeeper Program for Victorian employers who are doing it tough. To be eligible for the grant, a business must:
- Operate a business in Victoria;
- Be part of the JobKeeper program;
- Employ people (other than the business participant);
- Be registered with Worksafe on 30 June 2020;
- Have an annual payroll of less than $10million in 2019-2020 (ungrouped);
- Be registered for GST;
- Hold an ABN at 30 June 2020;
- Registered with your responsible Federal or State regulator; and
- There may be implications for businesses with adverse findings by regulators, under external administration, deregistration (or petition to deregister) etc.
If the business’ annual payroll is less than $650,000, it will receive $10,000. If its annual payroll is between $650,000 and $3 million, it will receive $15,000. If its annual payroll is between $3 million and $10 million, it will receive $20,000.
- The Victorian Business Survival and Adaptation Package
The Victorian Government is investing $3 billion to help businesses impacted by ongoing restrictions and prepare for COVID Normal business. The package will help businesses survive and keep Victorians in jobs.
- Grants of up to $30,000 will be provided specifically for Victorian licensed bars, restaurants, pubs, clubs and hotels.
- A competitive grants program will support metropolitan and regional business chambers and trader groups.
- Grants of up to $20,000 to help alpine businesses pay a service charge to Alpine Resort Management Boards.
There will be additional funding, tools and resources to help businesses adapt and prepare for reopening under COVID normal settings:
- $20 million voucher program to assist sole traders and small businesses in building their digital capability;
- $15.7 million package to help Victorian exporters get their products to market and establish new trade channels; and
- $8.5 million expansion to the ‘Click for Vic’ campaign to encourage more Victorians to support local businesses.
There will be tax and cashflow support from the Victorian Government:
- $1.7 billion in payroll tax deferrals for the full 2020-21 financial year;
- $41 million to bring forward the 50% stamp duty discount for commercial and industrial property for all Regional Victoria;
- $33 million to defer the planned increase in the landfill levy for six months;
- $30 million to waive 25% of the Congestion Levy this year, with the outstanding balance deferred;
- $27 million in liquor license fee waivers for 2021; and
- $6 million to waive Vacant Residential Land Tax for vacancies in 2020.
PAUL CARRAZZO CA & VICTOR NGUYEN CA
CARRAZZO CONSULTING PTY LTD
801 Glenferrie Road, Hawthorn, VIC, 3122
TEL: (03) 9982 1000
FAX: (03) 9329 8355
MOB: 0417 549 347
E-mail: paul.carrazzo@carrazzo.com.au or team@carrazzo.com.au
Web: www.carrazzo.com.au
