ASB MAGAZINE: It’s the good news surf retailers have been waiting for after June’s double digit growth (all categories) for retailers on our ActionWatch panel up +64.5% and bringing EOFY year back into positive single digit growth. The ‘dark cloud’ hanging over many surf retailers is whether successive months of growth would continue through until summer. Those clouds have parted slightly today with the Australian government announcing an extension of the JobKeeper scheme until 28 March 2021. The JobKeeper arrangements for the initial period to 27 September 2020 remain unchanged.
The key changes in relation to the JobKeeper Extension period are:
- A reduction in the payment amount per fortnight from AUD 1,500;
- The introduction of a two-tier payment system depending on the hours worked in February 2020; and
- A requirement to retest the decline in turnover. Further, it appears that the retesting is to be done on a quarterly basis (i.e., no option to apply the test on a monthly basis) and is to be based on actual 2020 GST turnover, and not projected 2020 GST turnover.
The forecast cost of the JobKeeper Extension is AUD 16.6 billion over the six-month period. This is considerably less than the cost of the current program which is approximately AUD 12 billion per month. The government’s forecasts assume a significant scaling back of eligible employees and business participants from approximately 3.5 million currently to between 1 – 1.4 million during the period from September 2020 to March 2021.
As of 21 July 2020, following reference documents were issued:
- New Treasury Fact Sheet: Extension of the JobKeeper Payment;
- Report of the Treasury JobKeeper Review, June 2020: and
- Government’s media release.
At this stage, no amendments have been made by the Treasurer to the JobKeeper Rules. The detailed mechanics to give effect to the government’s announcements will be found in these updated JobKeeper Rules.
JobKeeper to 27 September 2020
The JobKeeper arrangements as previously announced by the government will remain unchanged through until the end of JobKeeper Fortnight 13, ending on 27 September 2020.
The extension of the JobKeeper scheme will be split into two phases as follows:
- First phase: From 28 September to 3 January 2021 (JobKeeper Fortnights 14-20); and
- Second phase: From 4 January to 28 March 2021 (JobKeeper Fortnights 21-26).
The government has announced that in order to “better align the payment with the incomes of employees before the onset of the COVID-19 pandemic,” a two-tier payment system will be introduced. Broadly, a reduced JobKeeper Payment will be paid to employees working less than 20 hours per week on average in February 2020.
In addition, the maximum payment per fortnight will be reduced from AUD 1,500.
Further, in order to ensure that access to the JobKeeper scheme remains targeted to those most in need, organizations will be required to retest the decline in turnover in order to enter into the JobKeeper Extension, and then again apply the decline in turnover test in order to remain eligible for the second phase.
The requisite decline in turnover to be tested in the extension period remains unchanged as follows:
- 50% for those with an aggregated turnover of more than AUD 1 billion;
- 30% for those with an aggregated turnover of AUD 1 billion or less; and
- 15% for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities).
First phase: 28 September to 3 January 2021
Two tier payment
The two tier payment framework for the first phase is as follows:
- AUD 1,200 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
- Otherwise: AUD 750 per fortnight.
The Commissioner will have a discretion to set out alternative tests where an employee’s or business participant’s hours were not usual during the February 2020 reference period, such as where an employee was on leave, volunteering during the bushfires or not employed for all or part of February 2020.
The ATO is expected to issue further guidance where an employee is paid in non-weekly or non-fortnightly pay periods and in other circumstances the general rules do not cover.
Decline in turnover testing
In order to be eligible for the JobKeeper Payment in the first phase of the extension period, businesses, and not-for-profits will need to demonstrate that their actual GST turnover has significantly fallen in both the June quarter 2020 (April, May, and June) and the September quarter 2020 (July, August, and September) relative to comparable periods (generally the corresponding quarters in 2019).
Based on the information provided so far in the Treasury Fact Sheet, it appears that the decline in turnover testing will no longer be based on a comparison of projected GST turnover. Instead, it seems that the decline in turnover test will require businesses and not-for-profits to “compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019.”
Further, it appears that the decline in turnover testing required in respect of the JobKeeper Extension period must be based on GST turnover for a quarter, and the testing cannot be applied with respect to a month.
The Commissioner will have a discretion to set out alternative tests in specific circumstances where it is not appropriate to “compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019,” in line with the Commissioner’s existing discretion.
As the deadline to lodge a business activity statement (BAS) for the September quarter or month is in late October, businesses and not-for-profits will need to assess their eligibility for JobKeeper in advance of the BAS deadline in order to meet the wage condition. For example, JobKeeper Fortnight 14 (28 September to 11 October 2020) will be completed prior to finalization of the BAS for the September quarter or month.
However, the Commissioner will have a discretion to extend the time an entity has to pay employees in order to meet the wage condition, so that entities have time to re-apply the decline in turnover test and confirm their eligibility for the JobKeeper Payment.
Second phase: 4 January to 28 March 2021
Two tier payment
The two tier payment framework for the second phase is as follows:
- AUD 1,000 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
- Otherwise: AUD 650 per fortnight.
Decline in turnover testing
In order to be eligible for the second phase of the JobKeeper Extension period, businesses and not-for-profits will again need to demonstrate that their actual GST turnover has significantly fallen in all of the June, September, and December 2020 quarters relative to comparable periods (generally the corresponding quarters in 2019).
As above, the Commissioner will have a discretion to facilitate an employer meeting the wage condition, pending the lodgement of the December BAS.
Implementing the proposed changes
When the JobKeeper legislation (Coronavirus Economic Response Package (Payments and Benefits) Act 2020) was passed by the Parliament in April 2020, it empowered the Treasurer to make rules setting out the detailed mechanics of the JobKeeper regime. These rules could be made for payments “in respect of a time that occurs during the prescribed period.” The prescribed period was defined as the period between 1 March 2020 and 31 December 2020.
The Treasurer issued by way of a Legislative Instrument the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020. Further, the Treasurer has made a series of amendments to these Rules, by way of further Legislative Instruments.
Accordingly, within the envelope of the existing regime, the Treasurer is able to amend the Rules with respect to 31 December 2020. However, as the JobKeeper Extension will run until March 2021, it will be necessary for the relevant legislation to be amended by Parliament.
Parliament is due to next meet on 24 August 2020.