JobKeeper 2.0 – New Rules announced: What does it mean for your business?
15 September 2020
Mark Molesworth, Tax Partner at BDO Australia said: “Employers need to start thinking now about whether they are likely to satisfy the actual decline in turnover tests. The first fortnight under the new rules finishes on Sunday 11 October and any necessary ‘top-ups’ should be made by then.
“The explanatory statement does say that the Commissioner might exercise a discretion to allow late payments if the employer has trouble with determining their turnover by then, but I’d encourage businesses not to rely on it.
"Whether their employees are high rate or low rate - this will require going back through payroll records – so the work needs to begin now.”
JobKeeper Legislation background:
Structure of the rules
- The additional rules build on what we already have, so they will leave in place things such as the existing alternative tests for calculating decline in turnover, but with certain modifications about how and when turnover is measured.
- That said, there is nothing to stop the Commissioner making up further alternative tests, and he is given some further regulation making ability under these rules (see below).
Reassessment of decline in turnover
- The amending rules confirm that an entity must have an actual decline in turnover of the appropriate percentage:
- For JobKeeper from 28 September to 3 January 2021 – in the quarter ended September 2020
- For JobKeeper from 4 January 2021 to 28 March 2021 – in the quarter ended December 2020.
- A taxpayer may drop out of the system for the period 28 September to 3 January and then re-enter it for the final quarter.
- The Commissioner is specifically given regulation making power to define in which period supplies are taken to be made for the purposes of these tests. This is probably designed to overcome some of the mucking about that went on at the start of JobKeeper when time of supply became a real issue for some taxpayers.
- Rate of payment is now ‘high’ or ‘low’ depending on hours of employment in a particular ‘reference period’. A high rate employee is one who’s paid hours (i.e. for working or holidays) in the reference period totalled 80 or more. A low rate employee is everyone else.
- Reference period for employees is the 28 days ending at the end of the pay cycle that finished immediately before 1 March 2020 or 1 July 2020. If the employee was employed at both times, it appears the taxpayer can choose which one to use.
- Where the pay cycle is longer than 28 days (e.g. a calendar monthly pay cycle), you pro-rate the hours worked in the pay cycle to give the equivalent 28 day answer.
- Reference period for business participants is the month of February 2020 (which disturbingly, to my mind at least, had 29 days in it this year!).
- The Commissioner has another regulation making power to specify alternative reference periods for classes of employees if the periods above are not ‘suitable’ for that class.
- Until you notify the Commissioner of whether each and every employee is either high rate or low rate, you are not eligible for JobKeeper.
- You have to notify the employee whether they are high rate or low rate within 7 days of telling the Commissioner.