14 Aug ECONOMIC STIMULUS UPDATE – 14 AUGUST 2020
On 21 July 2020, in light of the continuing COVID-19 crisis, the Government announced it will extend the JobKeeper program by six months to 28 March 2021. We refer to these changes as JobKeeper 2.0 and covered them in detail during a webinar on 24 July 2020. However, the worsening economic conditions in Victoria due to the Stage 4 restrictions have caused the Government to rethink the eligibility conditions and make some further changes.
On 7 August 2020, the announced changes have resulted in modifications to the current JobKeeper program (JobKeeper 1.0) and JobKeeper 2.0 to assist businesses that may not suffer the requisite decline in their turnover in the June 2020 quarter but would for the September 2020 quarter given the subsequent shutdown orders. These rules apply to all businesses in Australia.
The Government estimates that the total cost of the JobKeeper Payment until March 2021 will now be over $100 billion. JobKeeper 2.1 represents a further increase in the cost of the program by $15.6 billion.
No legislation is available yet
Please note: These changes have been announced without any legislative instrument to provide detail against the announcements. Parliament sits on 24 August 2020 and it is at that point where we will have sufficient detail to have clarity on some of the issues outlined in the summary below.
The summary below is intended to represent the rules in respect to what we refer to as JobKeeper 2.1 (the changes to JobKeeper on 21 July 2020 + the modifications announced on 7 August 2020).
JobKeeper 1.0 – the original JobKeeper
The announced changes also have a bearing on those businesses that are either currently registered for JobKeeper or will qualify for JobKeeper in either August or September under the current rules. If have already qualified for JobKeeper and you want to understand how these changes may impact you please read below then call your client service team at our office. We outline the changes within the discussion about the changes in employment dates below.
As previously mentioned, JobKeeper 2.1 is the modification of the changes to the updated JobKeeper program announced in July (JobKeeper 2.0).
A table has been included at the end of this update to compare the original JobKeeper program (1.0) with the ultimate position of JobKeeper following those modifications (JobKeeper 2.1).
A summary of the JobKeeper extension rules as they currently stand after modifications are as follows:
Turnover test period and comparable period to satisfy decline in turnover
- Unlike the current JobKeeper rules which require businesses to satisfy the decline in turnover test only once for a single month or quarter between March and September 2020,
- From 28 September 2020 to 3 January 2021, businesses will need to demonstrate that their actual GST turnover has declined by the requisite percentage in the September 2020 quarter only, relative to the corresponding quarter in 2019;
- From 4 January 2020 to 28 March 2021, businesses will need to demonstrate that their actual GST turnover has declined by the requisite percentage in the December 2020 quarter only, relative to the corresponding quarter in 2019.
- These proposed changes now have regard for those businesses whose situations may have improved slightly in the June 2020 quarter but have deteriorated in the September or December quarters, such as those in Victoria that are subject to the Stage 4 restrictions.
New employment date
A further change will see the relevant date of employment move from 1 March 2020 to 1 July 2020. The announcement about this intended change will also result in more employees being covered under JobKeeper 1.0 for those employers that have already qualified for JobKeeper.
This is subject to the considerations below:
- The employee must still meet the eligibility requirements.
Please refer to the attached fact sheet regarding JobKeeper changes as to who constitutes an eligible employee https://bit.ly/3gKWOoh
- Rules in respect to nominations may preclude an employer including employees.
The JobKeeper Rules prevents an individual from being an eligible employee if they have given any other entity, or the Commissioner, a JobKeeper nomination notice. While this is designed to prevent an employee claiming JobKeeper through two employers at the same time, as the law currently stands, an individual can only be an eligible employee of a current employer if they had not previously nominated with a former employer. Without a legislative amendment, individuals who are employed as at 1 July 2020 would be ineligible for JobKeeper if they had previously nominated with a former employer.
- Wage condition for every employer still applies.
The change will apply from 3 August 2020. Amending legislation cannot be introduced into Parliament any earlier than 24 August, which will result in employers having to satisfy the wage condition before they can determine if they are eligible to claim JobKeeper for these employees. Hopefully, additional time to meet the wage condition for fortnights 10 and 11 will be allowed.
Tip: this new employment date currently reads as intended to apply to employers already on the JobKeeper system. If you are already receiving JobKeeper payments, we recommend you list those employees that were ineligible as a consequence of being employed after the original employment date of 1 March 2020 then consider the points made at a) and b) above to determine if they can be added to the JobKeeper claim.
Payment amount per employee per fortnight
- A two-tiered system will apply so that employees who worked for 20 hours or more in the four-week period before 1 July 2020 (changed from 1 March 2020) will be entitled to a higher JobKeeper amount (full rate) than those employees who worked less than 20 hours on average in June 2020 (partial rate).
- The fortnightly rate will be reduced from $1,500 in two stages:
- From 28 September 2020 to 3 January 2021, the full fortnightly rate will be $1,200 and the partial rate will be $750;
- From 4 January 2021 to 28 March 2021, the full fortnightly rate will be $1,000 and the partial rate will be $650.
Other considerations given JobKeeper has been extended
- Victorian Government business support fund extensions.
The Victorian Government has announced extensions to the business support fund. The grant amount has been increased for Metropolitan Melbourne and Mitchell Shire to $10,000 and $5,000 for regional Victoria. The due date for lodgement of any applications has been extended to 14 September 2020.
Please find more information on the link below: https://bit.ly/3kv0uMU.
- Victorian Government CBD Hospitality Grant
The CBD Small Hospitality Grant provides additional support to small and medium hospitality businesses in Melbourne Central Business District (CBD) that have previously received a grant from the Business Support Fund – Expansion program.Eligible businesses will be provided with a one-off grant of either $5,000 (for businesses with a food service seating capacity in the CBD of 11 to 100 seats) or $15,000 (for businesses with a food service seating capacity in the CBD of 101 or more seats) to help with the continued operation of their business.
Please find more information on the link below: https://bit.ly/3arx4eg.
- Other potential changes
The following stimulus measures were either linked to the JobKeeper program or announced as a stimulus measure all expiring at the end of September:
– Changes to the Fairwork Act
– The national code of conduct in respect to commercial leases
– Temporary relief for financially distressed businesses
At the moment there are only suggestions that these measures may be extended. They were always intended to end at the end of the 6 month from when the first measures were announced.
We will keep you updated in respect to these measures.
- Assess your ongoing JobKeeper eligibility
Many businesses that were not on JobKeeper or are already on JobKeeper we suggest you identify the following amounts. We can help you assess eligibility for Job Keeper 1.0 and JobKeeper 2.1.
– Actual Sales – July 2020
– Projected sales – August 2020
– Projected sales – September 2020
Although JobKeeper 2.1 will be based on an actual result for September, understanding your projected position will assist in planning. We can help you assess eligibility for Job Keeper 1.0 and JobKeeper 2.1.
- Identify employees that will qualify for JobKeeper
Identify each of those employees that may now qualify for the revised employment date of 1 July 2020. While detail as to how these rules will apply specifically, understanding the position as we understand it will allow you to plan.
There are number of variables at the moment which require careful planning. Whether it is a continued eligibility for JobKeeper or a review of your business’ position relative to how these rules apply the extension of these concessions mean planning is required now more than ever.
If you are interested in learning more please contact either Sam Cimino, Sam Marzano or any team member on (03) 8602 6100.
Please feel free to forward our email onto anyone who might appreciate this information. Stay tuned for further develops as they occur.
You can follow our updates via our website https://bossprivateclients.com.au/client-resources/blog/