The JobKeeper 2.0 legislation has passed
Understand how to qualify via the updated Basic and Alternative Tests
What doesn’t change with JobKeeper?
Businesses already enrolled for JobKeeper before 28 September 2020 do not need to re-enrol for the extension.
They will need to continue to report monthly by the 14th day of each month.
Businesses also do not need to reassess employee eligibility or ask employees to agree to be nominated by them again.
JobKeeper 2.0 Extension Periods
Extension 1: 28 September to 3 January
Extension 2: 4 January to 28 March 2021
Calculating the decline in turnover for JobKeeper 2.0 – Basic and Alternative Tests
Businesses can pass the turnover test using either the basic test or an alternative test.
The basic test is calculated at 30% actual decline in turnover
Extension 1 will use September 2019 quarter comparison period to compare to September 2020 quarter. For Extension 2 the quarter will be December 2019 and December 2020.
In applying the basic turnover test, businesses should know that:
- It must be done for specific quarters only
- They must use actual sales made in the relevant quarter, not projected sales
- They allocate sales to the relevant quarter in the same way they would report those sales to a particular business activity statement
Should you not qualify using the basic test, you may still be able to qualify using one of the alternative tests.
Alternative Turnover Tests for JobKeeper 2.0
The new alterative turnover tests remain relatively consistent with the original alternative turnover test with the same situations where there is not an appropriate comparison period.
- Newly Established Business
- Business Acquisition or Disposal
- Entity Restructure
- Business Expansion
- Effected by natural disaster
- Irregular Turnover
- Sole trader or small partnership with sickness, injury or leave
Business will need now need to report to the ATO which alternative test they are using.
Newly Established Business
If the entity commenced before 1 March 2020 but after the relevant comparison period (July 2019)
Alternative Test #1 – Use the average Monthly Turnover from commencement multiplied by 3 for the entity’s existence for the comparison period.
Alternative Test #2 – Use the average quarterly turnover in the 3 months immediately preceding the 1 March 2020. Not available for those business commenced less than 3 months before 1 March 2020
Business Acquisition or Disposal
If the entity acquired or disposed of part of their business, which has affected the turnover, between the test period and the comparison period (April 2019 – Feb 2020 for March 2020 test month).
Alternative Test #3 – Multiple by 3 the month immediately after the acquisition or sale as the comparison period.
Entity Restructure
If the entity has restructured and the restructure has altered the entity’s turnover.
Alternative Test #4 – Multiple by 3 the month immediately after the restructure as the comparison period.
Business Expansion
If the entity has experienced an increase in turnover of at least:
- 50% in the 12 months immediately before the test period, or 1 March 2020, or
- 25% in the 6 months immediately before the test period, or 1 March 2020, or
- 12.5% in the 3 months immediately before the test period.
Alternative Test #5 – Uses the 3 months immediately before either the test period or 1 March 2020: depending on growth period, as the comparison period.
Effected by natural disaster (drought, bush fires, floods)
If the entity conducted business in a declared natural disaster zone in the comparison quarter.
Alternative Test #6 – Use the same quarter in the year immediately before the disaster declaration as the comparison period.
Irregular Turnover
For entities with irregular non-cyclical turnover – where the quarters for the previous 12 months from either 1 March 2020 or the testing period, the lowest quarters turnover is no more than 50% of the highest quarters’ turnover.
Alternative Test #7 – Use the monthly average turnover multiplied by 3 for the previous 12 months as the comparison period
Sole trader or small partnership with sickness, injury or leave
Where the entity is a sole trader or small partnership with no employees and the turnover was effected as the sole trade or one of the partners did not work for part of the year due to leave, sickness or injury:
Alternative Test #8 – Multiple by 3 the month immediately before the sole trader or party returned to work
What if you don’t qualify for Extension 1?
For businesses who doesn’t qualify for JobKeeper 2.0 based on turnover in September (for Oct- Dec payments) can requalify based on December turnover (for Jan to March payments)
An entity that requalifies based on turnover for the quarter ending 31 December 2020 after ceasing to qualify based on turnover for the quarter ending 30 September 2020 does not need to notify the Commissioner again that it elects to participate in the JobKeeper scheme. However, it must report the rate that applies to any eligible employees or business participants and also notify any employees of the applicable rate
What if you’re not registered?
Businesses who are not yet registered for JobKeeper can continue to register after end of September but must meet original tests to qualify as well as the JobKeeper 2.0 actual turnover tests.
The Basic Test (actual decline in turnover) for each period (Extension 1: 28 September 2020 to 3 January 2021 and Extension 2: 4 January 2021 to 28 March 2021) does not require entities to have received JobKeeper payments for any or all of the earlier periods
Entities that have not previously participated in the JobKeeper scheme are required to demonstrate that they satisfy both the original decline in turnover test and the new decline in turnover test applicable to a particular JobKeeper fortnight e.g. to qualify for JobKeeper payments for JobKeeper fortnights beginning on or after 28 September 2020 and ending on or before 3 January 2021, entities must satisfy the original decline in turnover test and an additional actual turnover test
Changes to Payment Rates
The JobKeeper payment for each extension period will depend on the number of hours an employee works.
Employees who worked for 80 hours or more in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, or eligible participants who were actively engaged in the business for 80 hours or more in February and provide a declaration to that effect will receive payments of $1,200 per fortnight (before tax) for 28 Sept to 3 January period. All other eligible employees and business participants will receive $750 per fortnight and $650 per fortnight. Respectively.
Employees will meet the 80-hour requirement if, in their test period, the total of the following is 80 hours or more:
- Actual hours worked
- Hours on paid leave
- Hours paid for a public holiday
Full-time employees will very likely meet the requirements however businesses should look more closely at eligible employees who are long term casuals, working part time, not paid on an hourly basis or have been stood down.
How can Walsh Accountants Help?
Specialising in Entrepreneurial and Business Support – we’re here to help you.
If you need help understanding this new JobKeeper 2.0 legislation or require assistance in assessing and calculating your eligibility, please contact one of our Accountants to discuss your personal situation with them.
As we will be required to complete a direct comparison of quarterly trading periods, it would be helpful to have September reconciled in your accounting system before making contact with us.
