The JobKeeper law was passed on 8 April 2020, without amendments. This means the information already published by Treasury can now be relied upon, and the ATO has released details of the administration of the JobKeeper payment.
There are still more details to come and some aspects of the program yet to be clarified. Visit the Treasury JobKeeper webpage for details and download the JobKeeper payment – Frequently asked questions document.
We expect further updates to the scheme over time.
Eligibility for the JobKeeper payment depends on a range of criteria. The ATO JobKeeper webpage has been updated with full details and relevant information for employers, employees and tax professionals .
The Process for Employers
- From 20 April, employers can enrol in JobKeeper using their business portal. Tax professionals can enrol on their behalf using ATO online services for agents.
- Read ATO information to confirm eligibility of the business to receive JobKeeper on behalf of employees. Eligibility of the business is determined by the basic turnover test or alternative tests for businesses with unusual circumstances that are unable to compare current turnover to the same period in the prior year.
- Read ATO information to confirm eligibility of employees. Note that a business may be eligible but not necessarily all employees will be eligible. Each must meet relevant criteria. All eligible employees must be included, the employer may not decide that some eligible employees will not be included in their reporting. "One in all in".
- Pay employees and file pay events via Single Touch Payroll.
- If employee’s usual pay is less than $1,500 per fortnight, employer should make a top-up payment to the value of $1,500 gross, from 30 March 2020 according to the defined ATO reporting fortnights. (See JobKeeper Fortnight Dates and Codes for STP in ATO links below).
- Notify your eligible employees that you intend to claim the JobKeeper on their behalf.
- Eligible employees must complete the JobKeeper employee nomination notice and return to the employer within a week of enrolling for JobKeeper. The employer must keep this form on file for five years to document agreement by the employee to nominate this employer as the primary employer for JobKeeper purposes. (Employees may only receive JobKeeper from one employer).
- The ATO will reimburse the business monthly in arrears.
- Payroll and accounting software apps have now been upgraded to allow JobKeeper to be accurately processed.
- Enrol for JobKeeper payments starting 30 March or 13 April and pay at least $1,500 per fortnight prior to 8 May to be eligible to receive JobKeeper payments for April.
- Make a monthly declaration to reconfirm eligible business participants and to report turnover. Note that once the turnover test has been satisfied the business is eligible. The monthly turnover reporting is for information, not for retesting eligibility. The monthly declarations should include all eligible employees and should not include any employees whose employment has ceased since starting JobKeeper.
The Process for Sole Traders, Partnerships, Trusts or Companies
Sole traders, partnerships, trusts and companies are referred to as eligible business participants. These participants still need to meet eligibility requirements before enrolling in the JobKeeper payment scheme.
- From 20 April, sole traders and other entities can enrol in JobKeeper using their business portal. Tax professionals can enrol on their behalf using ATO online services for agents.
- Read ATO information to confirm eligibility of the business to receive JobKeeper payment on behalf of the business participant, (i.e., partner, trust or company). Eligibility of the business is determined by the basic turnover test or alternative tests for businesses with unusual circumstances that are unable to compare current turnover to the same period in the prior year.
- Eligible business participants (excluding sole traders), must complete the JobKeeper eligible business participant nomination notice and keep this form on file for five years to document agreement that the participant has nominated this business for JobKeeper purposes.
- Sole traders do not need to fill in a nomination notice.
- The ATO will reimburse the business monthly in arrears.
- Payroll and accounting software apps have now been upgraded to allow JobKeeper to be accurately processed.
- Enrol by 8 May if enrolling for JobKeeper payments starting 30 March or 13 April. Enrol by 31 May to be eligible for JobKeeper payments for April and May.
- Make a business monthly declaration to reconfirm eligible business participants.
JOBKEEPER PAYMENT EXTENSION TO MARCH 2021
In July, the JobKeeper scheme was amended and extended to March 2021. The current system remains unchanged until 27 September 2020, but changes will apply from 28 September. Further changes were announced on 7 August which extend eligibility and make it easier for organisations to qualify for the JobKeeper payment extension.
Some businesses currently receiving JobKeeper will no longer be eligible and others will continue to be eligible but will receive less subsidy as per the amended rules. There are now two tiers of payment based on the number of hours worked.
Organisations wanting to claim JobKeeper beyond September will need to reassess their eligibility based on actual turnover in the September 2020 quarter. The turnover must meet the relevant decline in turnover test, (according to entity type and size), to continue to be eligible for the JobKeeper subsidy from 28 September to 3 January 2021.
Organisations must then further assess eligibility in January 2021 and demonstrate they meet the relevant decline in turnover test for the December 2020 quarter, in order to remain eligible for the JobKeeper subsidy from 4 January 2021 to 28 March 2021.
Employee and Business Participant Eligibility
Eligible employee details are available at ATO Eligible employees webpage. The main change is the criteria for casual employees. A casual employee who has been regularly employed for at least 12 months prior to 1 July 2020 now qualifies as eligible for JobKeeper.
There are no changes to the eligibility criteria for business participants and sole traders.
Employee and Business Participant Reference Period
The reference period for worker eligibility has been amended to allow more employees and business participants to remain eligible for JobKeeper.
The hours worked during the reference period governs the payment tier the worker will qualify for.
Businesses can reference the four weeks prior to either 1 March 2020 or 1 July 2020. The period with the higher number of hours is used as the reference period.
The JobKeeper employer eligibility rules have not changed. If a business has not met the decline in turnover tests in previous months, it can still enter the system if it now meets the criteria.
New Rates from 28 September 2020 to 3 January 2021
• $1,200 per fortnight for employees and business participants who worked 20+ hours per week in the reference period.
• $750 per fortnight for employees and business participants who worked less than 20 hours in the reference period.
New Rates from 4 January 2021 to 28 March 2021
• $1,000 per fortnight for employees and business participants who worked 20+ hours per week in the reference period.
• $650 per fortnight for employees and business participants who worked less than 20 hours in the reference period.
JOBKEEPER TURNOVER ALTERNATIVE TEST
The turnover test for qualifying for JobKeeper can be established in two ways, either the basic test or the alternative test.
The basic test is based on GST turnover for a current period compared to the same period a year ago. Most businesses will satisfy the basic test, and do not need to satisfy any of the alternative tests.
1. Identify turnover test period.
2. Identify comparison period.
3. Work out GST turnover.
4. Determine which shortfall percentage applies according to entity type and size.
5. Determine if turnover has fallen by specified percentage to qualify.
Decline in Turnover According to Entity Type and Size
- Business with turnover < $1 billion – demonstrate a decline in turnover of 30% or more.
- Business with turnover > $1 billion – demonstrate a decline in turnover of 50% or more.
- ACNC registered charity – demonstrate a decline in turnover of 15% or more.
Alternative tests have been released to allow entities with unusual circumstances to qualify for the JobKeeper Payment where they do not qualify based on the basic test of decline in turnover.
An entity only needs to satisfy one of the alternative tests to qualify.
The alternative tests do not necessarily apply to every possible scenario. The alternative tests are available only in situations where the relevant comparison period in 2019 is not available or not appropriate for comparison.
Circumstances where an alternative test applies
- The entity commenced business after the relevant comparison period and did not exist in that period. Business must have started before 1 March 2020, i.e., must have existed on 29 February 2020.
- The entity acquired or disposed of part of the business after the relevant comparison period, i.e., the business is not the same business now as it was in the comparison period.
- The entity restructured after the relevant comparison period, i.e., the business is not the same business structure now as it was in the relevant comparison period.
- The entity’s turnover substantially increased by
o 50% or more in the 12 months immediately before the applicable turnover period
o 25% or more in the 6 months immediately before the applicable turnover test period, or
o 12.5% or more in the 3 months immediately before the applicable turnover test period.
- The entity was affected by drought or other declared natural disaster during the relevant comparison period.
- The entity has a large irregular variance in their turnover for quarters ending in the 12 months before the applicable turnover test period, excluding entities that have cyclical or regular seasonal variance in their turnover.
- The entity is a sole trader or small partnership where sickness, injury or leave have impacted an individual’s ability to work which has affected turnover.
Alternative Test 1 – Compare Average Monthly GST Turnover
Business started before 1 March 2020 but after relevant comparison period.
Compare average monthly GST turnover since the entity started against applicable projected GST turnover (i.e., 15%, 30% or 50% depending on entity type and size).
Average monthly GST turnover equals total of each month since business started divided by the number of whole months.
Business started on or after 1 February 2020 but before 1 March 2020.
Compare average monthly GST turnover in February against applicable projected GST turnover (i.e., 15%, 30% or 50% depending on entity type and size).
Average monthly GST turnover for February equals total of each day in February since business started divided by the number of days of operation multiplied by 29 days.
Alternative Test 2 – Compare Three Months GST Turnover
Business commenced after relevant comparison period but before 1 December 2020.
Calculate three months of current GST turnover by adding total turnover for December 2019, January 2020 and February 2020.
Monthly Comparison – divide Dec-Feb GST turnover by 3 to get average monthly total. Compare to applicable projected GST turnover to determine if business meets the decline in turnover according to entity type and size.
Quarterly Comparison – take the total of Dec-Feb turnover then compare the figure to the applicable projected GST turnover for the quarter beginning on 1 April 2020 or 1 July 2020 to determine if the business meets the decline in turnover according to entity type and size.
Drought or Bushfire Affected Business
If a business experienced drought or bushfire, those months are excluded from calculating the average monthly or quarterly GST turnover.
The entity must have qualified for the ATO’s Bushfires 2019-2020 lodgment and payment deferrals or received ATO concessions or qualified for any Disaster Recovery Funding Arrangements 2018 assistance measures.
AAT TURNOVER COMPARISON TOOL
Use the AAT Turnover Comparison Tool spreadsheet to calculate decline in turnover and keep a record of calculations for each client.
1. Determine which alternative test circumstance applies to the business.
2. Determine which alternative test applies; either #1 or #2.
3. Select comparison period from drop down menu.
4. Enter comparison period figures at C19 and D19.
GST TURNOVER CALCULATION MODIFIED FOR JOBKEEPER
Initial guidance from the ATO made JobKeeper eligibility based on GST turnover according to the GST Act, but as many business owners have never had to work out GST turnover this way, the definition has been modified for JobKeeper purposes to make it easier for business owners to work out if they qualify.
The ATO is now allowing turnover to be calculated on a cash basis if that is the activity statement reporting method usually used by the business. The ATO expects the business to use the same GST accounting method they normally use for activity statements, however initially either basis was allowed.
Whether cash or accrual method is used, the same method must be used to calculate the current period turnover and the comparison period. This also applies whether a business is calculating on actual or projected turnover.
GST free sales are included in calculating GST turnover, however not reportable or BAS excluded transactions are not.
For entities that are part of a GST group, the entity calculates its GST turnover as if it was not part of a group. This means that supplies between group members are included in GST turnover for the purpose of JobKeeper fall in turnover.
GST turnover includes all sales but excludes GST, input taxed sales, supplies made without payment, payments received for no supply (e.g., JobKeeper or government grants), gifts and donations and sales not connected with Australia.
Turnover Test for Entities Not Registered for GST
The amounts included in calculating GST turnover are the same regardless of whether a business is registered for GST, as turnover is always calculated exclusive of GST.
The ATO expects entities not registered for GST to use the same method of accounting to calculate decline in turnover as they use for income tax purposes.
Turnover Test for JobKeeper Extension
For the extension payment, the ATO now specifies that a business must use turnover calculations on the same basis as the GST reporting basis. To qualify for the extension, turnover comparison must be based on actual turnover, not a projected figure.
JOBKEEPER MONTHLY REPORTING REQUIREMENTS
The turnover test only needed to be satisfied once initially to qualify for the first round of JobKeeper. From September onwards, businesses will have to prove actual decline in turnover for the September quarter in order to receive JobKeeper for October to December.
Businesses will then need to further prove actual decline in turnover for the December quarter in order to receive JobKeeper for January to March 2021.
Eligible employees must also be confirmed each month and if employees have left the business, the business will no longer include them in the fortnights after having ceased employment.
PLEASE NOTE: it is important to have a signed completed declaration prior to commencing the declaration in the Online Services for Agents as there is no capacity to save the form and you must hold this declaration to adhere to the TPB's Code of Conduct for BAS agent requirements. See the AAT link below for a template you can edit to suit your needs.
FAIR WORK ACT JOBKEEPER PROVISIONS EXTENDED
Earlier in the year the Fair Work Act was amended to allow employers who qualify for JobKeeper to temporarily vary work arrangements in order to keep people employed.
The amendments included specific rules about JobKeeper stand down directions, change of duties and hours, and agreements about taking annual leave.
The original amendment was to cease on 28 September 2020. The Fair Work Act JobKeeper provisions are now legislated until 28 March 2021.
The extended amendments still allow for JobKeeper enabling stand down directions and changes to duties or hours.
The extended amendments no longer include special arrangements for annual leave. These rules will stop on 28 September and from then on, the usual rules for taking annual leave will apply as per the employee’s modern award or agreement.
Treasury fact sheet – JobKeeper Payment: Changes to the Fair Work Act
Fair Work Ombudsman – Coronavirus and Australian Workplace Laws
The Fair Work Act JobKeeper provisions allow some employers to continue using some of the JobKeeper provisions (with modifications) for previously eligible employees if they meet certain criteria.
Legacy employers are those who received JobKeeper payments but are no longer eligible at 28 September. They must also prove at least 10% decline in turnover for the previous quarter by obtaining a certificate from an eligible financial service provider or by statutory declaration (for small businesses only).
Statutory declarations can be used by businesses with 15 or fewer employees to declare that the business has demonstrated a 10% decline in turnover for the relevant quarter and must be completed by the employer or authorised representative of the employer. They can also get a certificate if preferred. If using a statutory declaration, the declaration must be completed before the start of the quarter.
Certificates can be issued by an eligible financial services provider – a qualified accountant or registered tax or BAS agent. The certificate must confirm a decline in GST turnover of at least 10% to qualify.
Legacy Employers and Fair Work Act JobKeeper Provisions
Under the extended Fair Work Act JobKeeper provisions, legacy employers can still issue JobKeeper enabling stand down directions and change hours and duties. Employers must continue to follow the employee consultation process as per Fair Work Ombudsman information.
Legacy employers must also inform relevant employees whether they have obtained a certificate or statutory declaration and whether the JobKeeper enabling direction or agreement will continue on or end.
Any existing JobKeeper enabling directions or agreements with employees about change of hours and duties will end on 27 September. Employers must reissue or make new directions or agreements.
For full details on legacy employers and Fair Work Act JobKeeper provisions visit the FWO JobKeeper Extension webpage.
Fair Work Ombudsman – Legacy Employers
Attorney-General’s Department – Statutory Declaration
JOBKEEPER IN SOFTWARE
Check the accounting and payroll software providers for details of how to set up and process JobKeeper in your software.
MYOB – COVID-19 Wage Subsidy (JobKeeper) Payments
Xero – Process JobKeeper Payments
QuickBooks Online – Set Up and Manage JobKeeper Payments
Processing JobKeeper in Reckon One
Processing JobKeeper in Xero
JobKeeper: Monthly Declaration Lodgment
Authority to Lodge Electronically
Authority to Lodge JobKeeper Monthly Declaration
Authority to Lodge JobKeeper Extension
ATO JobKeeper Fortnight Dates and Codes for Single Touch Payroll
ATO Applying the turnover test
ATO JobKeeper Alternative Test
ATO GST Turnover
ATO Eligible Employers
ATO Eligible Employees
ATO JobKeeper for sole traders and other entities
ATO JobKeeper payment decline in turnover test - Law Companion Ruling LCR 2020/1