COVID: JobKeeper 2.0

***updated 25 Sept 2020***

Who would have thought we would still have people in isolation in August, and be discussing JobKeeper extensions? I certainly had expected the world to be in a better position by now.

Alas, here we are... but thankfully there is some help continuing with JobKeeper 2.0. Once again, we are here helping you navigate through the new laws.

OVERVIEW

JobKeeper 1.0 is coming to an end on 27 September 2020. If not for the new 2.0 version, this would have seen the end of the support line. The Government has decided to create 2.0, with an extended end date of 28 March 2021. But, it is not automatically available to everyone, even if you were receiving version 1.0 payments. It is designed to ensure that the businesses that need the most help continue to receive payments. 

JobKeeper 2.0 is available to new recipients assuming they meet eligibility requirements and the additional turnover tests during this extension period. 

In version 2.0 there are two periods:

  • 28 September 2020 to 3 January 2021 (let's call this "period one")
  • 4 January 2021 to 28 March 2021 (and this "period two")

The amount of the payment is changing too, depending on hours worked. See more below.

KEY CHANGES

  • To be eligible for JobKeeper 2.0 in period 1 you need to show an actual GST turnover decline in the September 2020 quarter (1 July 2020 to 30 September 2020) as compared to the relative comparable 2019 period. 
  • To be eligible for JobKeeper 2.0 in period 2 you need to show an actual GST turnover decline in the December 2020 quarter (1 October 2020 to 31 December 2020) as compared to the relative comparable 2019 period.
  • Alternative Tests are now allowed! Read more here.

This basically means, you need to continue keep tidy books, and add up your GST Turnover (scroll to the bottom for explanation of this term) for the quarter and compare to the same quarter last year. If you see a 30% decline, then you meet that element of eligibility and can apply for that version 2.0 period. 

HOT TIP: The timing of this means you will be reporting before you lodge your quarterly BAS (if registered for GST in most instance). Keep very tidy books as you go. Keep on top of deadlines. Help your accountant to lodge your BAS as fast as possible (but be kind and patient with them). 

The amount of JobKeeper has changed too:

  • If eligible employees or eligible business participants worked 20+ hours they get $1,200 per fortnight through period 1, and then $1,000 per fortnight for period 2.
  • All others eligible employees or business participants will get $750 per fortnight for period 1, and then $650 per fortnight for Period 2.

The employee eligibility conditions have changed too. Fun.

  • Employees as at 1 July 2020 are now being considered (this date was 1 March 2020 for JobKeeper version 1.0). 

NEW TEST: 20+ work hours (the 'look back' approach)

  • From 28 September 2020, eligibility for "full rate" (the $1,200) depends on the employee working in the 4 weeks of pay periods before either 1 March 2020 or 1 July 2020 for 20 hours or more on average.

    This basically means there is an 'employment' reference period - it is either Feb 2020 or June 2020, depending on when the person was hired. If the employee started in July, then look at June 2020 being the 4 weeks before 1 July. If they start before 1 March, then you have to choose the period (Feb or June) that has the higher number of hours worked. 

  • Note that the ATO has discretion to apply an alternative test if they were not usual hours from Feb to June, being the reference period).
  • If you are the employer, you must nominate which payment rate is being claimed for each employee. I imagine you will do this through MyGov, and might need to make changes to your payroll accounting system!
  • If you have apprentices or trainees then other new conditions might be in place (check ATO website).

Don't worry my lovely SOLE TRADERS, you are not forgotten. JobKeeper 2.0 remains available to you (and also to partners in a partnership, beneficiaries of Trusts and shareholders or Directors of Companies). 

  • The info above re turnover test, dates, amounts and all of that applied to you too. 
  • The 20+ hours test also applies to you! I recommend keeping a weekly diary proving/noting the actual hours you are actively engaged in the business.

NOT CHANGING

  • The BASIC TEST turnover % are not changing - for my clients with a turnover of less than $1 billion, this means the 30% downturn is still a condition - we have the formula noted at the end of this blog. 
  • If this Basic Test is not passed, then you might be able to apply one of the ALTERNATIVE TESTS for turnover (there are 7!)
  • All other employee eligibility criteria (not listed above as a change) from version 1.0 remains the same. 
  • Employers need to continue paying employees equal to or greater than the amount of the JobKeeper payment (before tax) based on the payment rate that applied to each employee. It will now potentially be different for each employee.
  • JobKeeper is still available to non-employees, like sole trader, beneficiaries, partners, shareholders or directors. But, you do need to meet the new version 2.0 criteria (above). 
  • The really challenging rules around when your business officially started and whether you had lodged tax on time (which is ruining for a lot of artists, I know) are unfortunately unchanged. Sorry folks. 
  • Payments will continue to be made in arrears (i.e. after the fact). So, as an employer you pay your employees then get 'reimbursed' by the ATO when you make your monthly report to them. 

WHAT TO DO NEXT

  • Book time in your diary towards end of September to figure out if you meet the new criteria, then if you do, log into MyGov or contact your accountant to get it sorted.
  • Stay on top of BAS lodgements (if applicable).
  • Add a reminder to your phone to do your diary of hours each week from now.
  • Add a reminder to your phone for monthly reporting.
  • If you are an eligible business participant, make a doc (saved somewhere safe) noting all these new tests and average hours for the test period so you have it in case of audit later.
  • If you are an employer, make a fancy spreadsheet showing all employees, their hours worked, calculate the averages and note their eligibility. Then also note which level of JobKeeper payment that will apply to them.
  • Update payroll template time sheets, settings, etc. 
  • Communicate the changes to your team (if applicable).
  • Call/email your accountant and book a time to chat if you need.

 

REMINDERS RE KEY TERMS

What is "turnover"?

Think of it like INCOME.

Not profit (which is income minus expenses). 

Technically speaking, the JobKeeper rules state that an entity satisfies the decline in turnover test at a test time if:

"(a) the entity’s projected GST turnover for a turnover test period in which the test time occurs falls short of the entity’s current GST turnover for a relevant comparison period..." (Rule 8(1)(a))

So... what is projected GST turnover?

"Projected GST turnover has the meaning given by the GST Act" (per the definitions section of the super boring Act I had to read for you guys).

Cool, that doesn't really help...

The GST Act defines in s188.20:

"Projected GST Turnover: Your projected GST turnover at a time during a particular month is the sum of the values of all the supplies that you have made..."

FYI we're going to refer to this as "turnover" from here on out because the GST and 'projected' bits are confusing the matter, in my opinion.

Now, this all sounds like it is talking about BAS stuff, right!?

Nope. Surprise. 

GST Turnover is not actually BAS turnover. It is turnover as defined in the GST Act.

So, what does this actually mean?

  • Income for the period, compared to income for the other period
  • You can use cash or accrual accounting of that income

The ATO have said that technically accruals is the correct method, but if you use cash method on your BAS (or for your tax return I imagine) then you can use cash for this calculation too.

Projected GST turnover and current GST turnover excludes the following:

  • GST you included in sales to your customers (if any)
  • sales that are input taxed sales (e.g. bank interest, sale of shares, residential rental income)
  • sales not connected with an enterprise that you carry on (e.g. sale of private car)
  • sales that are not made for payment (unless a taxable supply to an associate)
  • payments for no supply (e.g. JobKeeper payments)
  • gifts and donations (except for deductible gift recipients and ACNC-registered charities as discussed above)
  • sales not connected with Australia, for example:
    • sales of services made through a business you carry on outside Australia
    • sales of goods purchased and sold from a place outside Australia
    • sale of real property situated outside Australia

KEY MESSAGE: Pick any method (cash or accrual), just be consistent with the same method between the comparison periods.

Thanks to the total legend accountant who posted about this in the Xero Partners group. My clients and I thank you for the clarity. 

If you are still confused, just flick me an email. 

Formula: 
[(Old - New) / Old] 
= %  of change (presented as a decimal)

Example:

  • $20,000 in SEPT QTR 2019
  • $15,000 in SEPT QTR 2020

$20,000 - $15,000 = $5,000
$5,000 / $20,000 = 0.25
This is 25%, which is not more than 30%, so this would not qualify. 

 

Here's what to expect when enrolling through MyGov for 2.0:

 

These are example screenshots - please make selections and enter figures that are correct and appropriate for you/your business.

Click CHECK

Once you are done, hit Submit to check your turnover-related eligibility.

I recommend printing a copy of this and saving it in the cloud for you in case of audit or question later down the track.

 

At the time of writing, the extension info can be seen in full here. Don't forget the ATO have some support measures in place too. JOBSEEKER has also changed a little.

Reach out if you need a hand here and we can point you in the right direction. 

 

Here's hoping we will all be back on our feet soon (dancing and grinding on each other without the fear of covid)! 

xxx Lauren

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