The Government has recently extended the JobKeeper Payment, giving longer support for businesses for another six months. Originally, this initiative was due on 27 September 2020. However, it will stay accessible for eligible companies, self-employed workers, and non-profit organisations until March 2021.
Aside from the extension, one more pertinent change that should be mentioned is the increased employee eligibility. Formerly, the relevant date of employment was 3 August 2020. It will now move from the beginning of March to July 2020. Other changes, including the payment rate, will be discussed in this blog post. Read on to find out more.
JobKeeper Benefits to Be Extended
Early in July, we posted an article about JobKeeper, which contains details about the scheme and how it affects taxes. You can find it here. A month later, the Treasury updated the fact sheet concerning the extended scheme. Shortly after, the Treasurer registered amendment rules on 14 August titled the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 7) 2020. It changed the employee eligibility reference date, providing more opportunities for businesses to gain the support they may require. The new date is now from 1 March 2020 to 1 July 2020, effective starting 3 August 2020.
The Government announced that the ongoing COVID-19 crisis has resulted in many more companies and workers to suffer from a financial crisis. For this reason, the JobKeeper Payment scheme will be extended until 28 March 2021, rather than the previously declared end date, which was 27 September 2020.
The extended scheme is made of 13 fortnights where the proposed extension will double the length of the initial system. Starting from 28 September this year, the following shall take effect:
- There will be a two-tier payment rate, which will be based on the average work hours per week.
- The last fortnight payment was $1,500. The new one will be lower at the beginning of the extension and will be reduced further next year on 4 January.
- Retesting of the decrease in turnover will be performed each quarter.
- The reduction in the turnover test will be applied based on the GST turnover.
The Treasurer spoke about the further changes on 7 August 2020. The target of the modifications is to increase access to the JobKeeper scheme through the extension from 28 September to 28 March. The main driver of these changes is the ongoing crisis and Stage 4 business restrictions implemented in different parts of the country.
The revisions state that entities no longer have to meet the quarterly decline in the turnover test for multiple quarters. Instead, they are only required to meet the decline for the previous quarter.
More Changes Revealed
Another significant change is the employee eligibility test date. Starting 3 August, the date moved from 1 March 2020 to 1 July 2020. This reference date applies for the latest four fortnights of the scheme, along with the extended period duration. It means that those who were hired after 1 March could benefit from JobKeeper payments.
The same media release mentioned above also reported the possible outcomes of the revisions, which include:
- There is a massive jump from $101.3 billion to $15.6 billion in additional costs.
- Application of the extended scheme will be nationwide.
- Approximately four million people will be eligible for the payment in the September 2020 quarter.
- The number will fall to over two million by December.
- By March, there will only be 1.75 million eligible individuals.
To understand the changes better, we have outlined the amendments below, starting with the qualified employees. The eligibility criteria for businesses and employees changed beginning Monday 3 August 2020:
- The employee started working at any time from 1 March to 1 July, including those who were rehired and stood down.
- From 1 July, the employee should be at least 18 years old, independent, and not studying full-time.
- From the same date as above, the employee should be a part of the business, whether part-time or full-time. Casual employees are eligible only if they have been with the firm for a few years now.
- Only Australian residents are qualified, meaning they are considered by law as an Australian citizen for social security purposes. Tax residents are also allowed, as well as those who hold a Subclass 444 visa.
- The individual should know and agree to be nominated as an eligible employee by the employer.
- Finally, the person will only be qualified if they do not receive a paid parental leave from the Government. The same rule applies to those with workers’ compensation payments due to incapacity.
Now, let us talk about the payment rates. In the previous scheme before the extension, the rate was $1,500, which was given to employees every fortnight. Note that the payment rate is the minimum amount that the employer should pay to the eligible employee. It is a flat rate, which is not affected by the work hours of the person.
Meanwhile, in the extended scheme, the payment rate is divided into two tranches:
- From 28 September 2020 to 3 January 2021, the employee will receive $1,200 fortnightly or $750 each fortnight for the partial rate.
- From 4 January 2021 to 28 March 2021, the full rate will be $1,000 fortnightly and $650 for the partial rate, which will be given each fortnight, as well.
In the extended scheme, there is now a distinction between the different types of employees through the two-tier payment system. In the previous scheme, the minimum payment is all the same for full-time, part-time, and casual employees.
But the two-tier system applies to employees based on their work hours each week. The reference period for this system is the four weeks of pay periods before 1 March or 1 July. For workers who are in the 1 March 2020 eligibility can use the pay period with the higher number of hours they worked. The new tiers work as follows:
- If the employee worked in a company for at least 20 hours each week, they could qualify for the full rate. Businesses should be actively operating for 20 hours or more weekly to be eligible.
- The partial rate applies to an employee who did not fulfil the 20-hour requirement but was still actively engaged in their job or business during the mentioned reference period.
Many employees experienced a decrease in their work hours due to COVID-19. If you are among them and your work hours decreased from 20 hours weekly to less than this number after February or June 2020, you can still claim your full payment rate. Businesses, however, will not qualify for the full rate if they operated less than 20 hours weekly on average before March to July 2020.