Like flying into Heathrow Airport, JobKeeper 2.0 has been circling for weeks leaving you with your seatbelt on and desperate for the toilet. Now that it has landed, time to decide between the toilet or pole position at customs.
What does this have to do with JobKeeper 2.0? Nothing I got distracted.
If you want Illumin8 to assist with assessing your eligibility & enrolments for JobKeeper 2.0, please let us know
JOBKEEPER 2.0 – WHAT DO I NEED TO DO (HIGH-LEVEL)
- Assess your eligibility – am I down 30%?
- Assess the standard hours for your eligible employees and business participant – more or less than 20 hours/week?
- Enrol if new, as is if continuing.
- Inform eligible employees of changes, if applicable, in writing.
At the time of writing this blog, we are still waiting on the ATO to release how we will need to report hours but what we do know is that we will need to continue to lodge monthly declarations.
JOBKEEPER 2.0 – THE DETAILED HIGH-LEVEL
- The required fall in GST turnover percentages will remain the same – 30% for an aggregated turnover of $1 billion or less – 50% for an aggregated turnover of more than $1 billion – 15% for ACNC-registered charities other than universities and schools
- There are two rates (tiers) of payment - tier 1 and a tier 2
- Tier 1 rate for eligible employees who were working for 20 hours or more a week on average in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, and – eligible business participants who were actively engaged in the business for 20 hours or more per week on average during February 2020.
- Tier 2 rate applies for other eligible employees and business participants; those working under 20 hours.
- Employers and businesses will need to nominate the rate they are claiming for the eligible employees and/or eligible business participants.
Extension 1 – 28 September 2020 – 3 January 2021
- You will need to demonstrate that your actual GST turnover has fallen in the September 2020 quarter (July, August, September) relative to a comparable period (generally the corresponding quarter in 2019) – base test.
- Tier 1 is $1,200 per fortnight.
- Tier 2 is $750 per fortnight.
Extension 2 – 4 January 2021 – 28 March 2021
- You will need to demonstrate that your actual GST turnover has fallen in the December 2020 quarter (October, November, December) relative to a comparable period (generally the corresponding quarter in 2019) – base test.
- Tier 1 is $1,000 per fortnight.
- Tier 2 is $650 per fortnight.
If you are already participating in JobKeeper 1.0, you merely need to retest based on the above. If you are not already participating on JobKeeper 1.0 or do no quality based on the above, you assess your eligibility for JobKeeper 1.0 first, then look at the alternate tests.
For eligible employees and business participants that do not meet the required hours for tier 1 and you assess that the relevant reference period is not reflective of regular hours, you will need to look at alternate reference periods.
If the actual test applies, the alternative test are not relevant. If one of the alternative tests applies to you, then that is enough, you only need to satisfy one.
The alternative tests under JobKeeper 1.0 are referred to as"original decline in turnover test" and under JobKeeper 2.0, referred to as "actual decline in turnover tests".
All alternate tests below are based on actual (current) GST turnover instead of projected GST turnover.
Without further ado, here are the relevant circumstances for which the alternative tests can be applied:
- You commenced business before 1 March 2020 but don't have a standard comparison period (New to Business)
- You have undergone a disposal, acquisition, or restructure
- You had a substantial increase in turnover
- You were affected by drought or other disasters
- You have irregular turnover, and
- You are a sole trader or small partnership that is affected by sickness, injury or leave
Below is a little more detail on each.
NEW TO BUSINESS
- The key is new "to" business; this different to a new additional business. Business "commenced" after the comparison period in 2019 but before 1 March 2020.
- FIRST TEST – average monthly turnover (whole months) since commencement to 29 February 2020 multiplied by three OR
- SECOND TEST – the three months immediately before 1 March2020 the applicable turnover test period.
- For the first test, days can be used if commenced post 1February 2020; for the second, must have commenced before 1 December 2020.
For the September 2020 quarter, the business must have commenced after 1 July 2019. You can average the monthly turnover from commencement (first whole month) to 29 February 2020 and multiply by three or look at the period 1 December 2019 to 29 February 2020.
DISPOSALS, ACQUISITIONS AND RESTRUCTURES
This is a little complicated, but effectively, the comparative period is the month following the change, multiplied by three.
For the September 2020 quarter, this will be the first full month after the change multiplied by three.
"SUBSTANTIAL" INCREASED TURNOVER (GROWING)
- "Substantial" is the keyword here.
- A 50% increase in 12 months to test period or before 1March 2020.
- A 25% increase in 6 months to test period or before 1March 2020.
- A 12.5% increase in 3 months to test period or before 1March 2020.
- If met, you should use the quarter immediately before the applicable turnover test period.
For the September 2020 quarter, the test period is either the period to 29 February 2020 or to 30 June 2020, comparing the three months before 1 March 2020 or 1 July 2020. To test the increase in turnover for the period before 1 March 2020, compare February 2019 (for 12 months), August 2019(6 months) or November 2019 (3 months) to February 2020. Similar theory applied for the period before the alternate test period.
Again this one is a little complicated but in effect, your comparison turnover for the quarter a year before the drought/natural disaster.
- You must have a variance of at least 50% between a consecutive 3-month period, within below 12-month period.
- Average turnover for the 12 months immediately before 1March 2020 or the applicable turnover period.
For the September 2020 quarter, the test period is the year before 1 March 2020 or before 1 July 2020 (in effect the 2020 financial year).
SOLE TRADER/SMALL PARTNERSHIPS WITH SICKNESS, INJURY OR LEAVE
· A little complicated, but effectively, the comparative period is the month before the change, multiplied by three.
· Must not have employees.
For the September 2020 quarter, this will be the first whole month before any change multiplied by three.
WHAT DOES NOT CHANGE?
- You don't need to re-enrol for the JobKeeper 2.0 if you are already enrolled for JobKeeper 1.0.
- You don't need to reassess employee eligibility or ask employees to agree to be nominated by you as their eligible employer if you are already claiming for them.
- You don't need to meet any further requirements if you are claiming for an eligible business participant, other than those that applied from the start of JobKeeper relating to holding an ABN and declaring assessable income and supplies.
- 28 September 2020 – JobKeeper 2.0 starts.
- Have until 30 September 2020 to enrol for JobKeeper 1.0.
- Have until 31 October 2020 to pay eligible employees for JobKeeper Fortnight (JKFN) 11-Oct-20 and 25-Oct-20.
- 14 November 2020 – if already enrolled tell ATO of tiers (higher/lower payment) plus provide details of turnover.
- Monthly declarations are still required by 14th of each month.
WHAT ELSE DO I NEED TO KNOW?
At a base level:
- Calculations are based on actual GST turnover only, not projected.
- If you are registered for GST, you will look at the 'total sales' reported at G1 on your BAS minus GST payable (1A) and compare periods. If you lodge your BAS on a cash basis, you use cash, if accruals, accruals (non-cash).
- If you are not registered for GST, you will work out your turnover using either the GST cash or non-cash basis of accounting.
- You must provide the details of your actual decline in turnover for the September quarter before you complete your November monthly declaration.
At a deeper level:
- At the time of writing, this blog, we were still waiting on the ATO to release the details behind the alternate test.
- For eligible employees, reference time means 1 March 2020 or 1 July 2020 and the reference period is 28-days prior to the reference time.
- For business participants, reference time means 1 March 2020 only and reference period is 29 days of February 2020 (whole calendar month).
- Alternate reference period rules are available for eligible employees, and business participants should reference period not be representative of normal hours.
WORDS OF WISDOM (AND WARNING)
- "no entitlement to payment unless records keeping requirement are met" – direct quote, as legislated.
- The ATO has indicated that unlike JobKeeper 1.0, a 30% fall in GST turnover is a hard 30%. As it is based on actual and not projected figures, leniency will not be applied.
- Message from Fair Work – “communicate with your employees”.
- The 10% decline in GST turnover relates to the Fair Work Act and JobKeeper Direction only; it has nothing to do with JobKeeper Payments.
- Sale of assets are included in GST turnover.
- A reminder of the ATO's opinion of schemes to illegally obtain JobKeeper