Practical Steps for JobKeeper 2.0
To do before end of this month
If you are already part of JobKeeper 2.0, you don’t need to re-enrol for the December 2020 extension and March 2021 extension.
You don’t need to re-assess your employees eligibility or ask your employees to agree to be nominated again.
The practical thing you can do is if you have Xero, you can actually run through your payroll page. There’s a payroll support page that will outline all your employees that are eligible. With JobKeeper 2.0, it will actually ask which tier are they on, assuming that you are eligible as a business and you meet the decline in the turnover test first.
You don’t need to do re-enrolling but there will be a lot of testing around how many hours your employees work, which tier do they belong in, testing around your actual turnover of September 2020, versus 2019, or alternative tests. You have to reassess your employees.
You also don’t need to meet any further requirements if you are claiming as a business participant. If you are already claiming as before, you don’t need to change that over, assuming you are eligible as a business. You still need to test your turnover first before you move forward.
Important Details About The 20-hour Test For Employees
In terms of the 20-hour test, we actually look back to February, 2020 – just before COVID made things a bit weird in the world. Tier one is for employees who have worked on average 20+ hours per week. Tier two is for employees who have worked below 20 hours on average per week.
Now, there is also discretion to look at the month of June. If you had someone start after March in your business who was employed at 1 July, they could be eligible for JobKeeper now. They wouldn’t have been working in February if they’d been hired after the 1st of March. So for cases like that, you test their average hours worked in June, which is actually pretty nice.
There is ATO discretion to be applied to alternative tests if the employee’s hours were not usual during February, 2020. Imagine things like sick leave, maternity leave, off work with an injury or something like that. We can have a look at seeking out some discretion there. Let’s say they’ve picked back up since, in hours, that might be a really good evidence to show. Then the employer must nominate which payment rate is being claimed for each employee which will be done in the JobKeeper reporting. In the initial reports, we said, “hey, look, here’s our eligible employees.” We had to list all their names. Some payroll software like Xero did a lot of the heavy lifting for you. Now, we’ll need to go and further declare which rate that people are on, including the business participant.
Now, if they don’t meet the 80 hour test or 20 plus hours per week, there are alternative tests. That’s where it gets a little bit complex but there are ways where they will look at your circumstances and then see whether the employee is meant to be in Tier one or Tier two. Or, if they should get paid more or not. There’s a little bit more complexity in there in drilling down whether your employee is in Tier one or Tier two.
Simple Tweaks To Your Business Can Have A Massive Financial Impact
On a recent webinar, Inspire’s Chartered Accountant, Rizal Ramzan shared his story on simple tweaks he made for our clients that have made a massive financial impact.
Here’s what he said –
I want to share a story with our Emergency Assistance Meetings – we did quite a few of them back in April, May and June. We’ve had clients that actually had the opportunity to have a deep dive on their business as well as seeing what they can do to trim the fat (unnecessary expenses.) And interestingly enough, that exercise taught them that there’s actually quite a lot of wiggle room in terms of just doing little things to increase profitability of their business, and keeping more cash on hand and how to manage cashflow.
We’ve seen clients talking the same language now and even using the forecast that we use to get them across the bridge to actually run their business.
It is actually an interesting process. Even if you’re not sure, it’s a process that you can go through to learn more about how to lift up that profitability and see how those numbers really play out. If you tweak one or two things, you can see a massive impact to your business.
If you need to have a chat with an Accountant about your business – book in a free Strategy Chat with an Inspire Life Changing Accountant today – https://inspire.accountants/chat/
JobKeeper 3.0 - Update 7 August
Last week we hosted a JobKeeper 2.0 webinar. In that webinar, we shared that to be eligible for the JobKeeper extension, the June quarter of a business’s turnover needed to be down compared to last year as well as the September quarter.
Now, on the 7th of August, which was last Friday, the government amended the rules that they’ve initially released on the 21st of July. So, our webinar is actually outdated already a week after it was released.
The distinction was, instead of the June and September quarters, it’s now just the September quarter to be eligible for the first extension to JobKeeper.
What the test period for the March quarter next year will be, is only having a look at your December quarter – not what we originally said in that webinar.
The reason why they did that is because what happened in Victoria with a second round of lockdowns, is that we saw businesses take a hit from March, onwards. They might have picked back up towards June, July, and now they’re going to take another hit. So, technically, a lot of Victorian businesses who’ve had to close again, wouldn’t have been eligible for JobKeeper 2.0 under their original rules. So they’ve adjusted it and it’s much more favourable to businesses and much more in the essence or in the spirit of what they’ve wanted to do here.
So here are the 3 key changes:
- We no longer need to test the June quarter.
- If we want to claim for the JobKeeper payments for December, we look at the September quarter’s actual results.
- When you’re claiming from March quarter next year, we’re looking at the December quarter’s actual results.
So these are the updates we wanted to share with you in case you haven’t seen any sort of information since Friday the 7th of August, which is when they released these changes.
Keep an eye out for more details to come.
JobKeeper 2.0 - What's changed?
On the 21st of July, the federal government announced the extension of the JobKeeper Programme – they’re calling this JobKeeper 2.0.
Here are a few changes that are happening –
Extension to the JobKeeper Program
In terms of the timeline of the extensions, the first JobKeeper package ran from April through till September this year, which hasn’t finished yet. But, there’s actually a two stage extension to the JobKeeper Programme. The first one is from the October to December quarter. The second is a three-month window from January to March next calendar year. All together, this is a further six month extension to the JobKeeper Programme.
Payment Rates
Payment rates will now depend on the hours that your employees worked.
If your employees worked more than 20 hours, and the test period was before March this year, their payment rate for the initial three-month extension drops down from $1,500 a fortnight down to $1,200 a fortnight. And for the second three-month extension, January to March next year, we’ll see that drop down again to $1,000 a fortnight.
If they work less than 20 hours a week, the payment rate drops from $1,500 a fortnight down to $750 per fortnight for the October to December quarter – because they didn’t account for hours that person worked. Then down to $650 a fortnight for January, February, March next year.
Test Period
The other significant change is the test periods. With JobKeeper 1.0, if you’re eligible for a month-versus-month in the previous year or, quarter-versus-quarter, from that point that you were eligible, you’re eligible for the initial six-month window regardless if your business picked up again. But with JobKeeper 2.0, these two three-month extensions will test your actual turnover.
Based on Actual Results
The initial release was on the 21st of July just as Victoria was going into their second round of lockdowns. The feedback was that it’s actually not going to be great for Victorian businesses who had their initial hit. They’ve picked up and now they’re down again because a lot of them wouldn’t have been eligible for the second round.
What they’ve done is, for the October to December three-month window, you need to review your September quarter versus your September quarter last year and see if there’s been a drop in turnover that way. We need to look at actual results now, not projected.
Alternative Testing
The second extension (January, February, March next year) you need to look at how your December quarter 2020 has gone, versus December quarter last year. They have flagged that there will be alternative tests.
Let’s say you’re a new business or you’re a high growth business and comparing it to one year ago, the quarter doesn’t quite work to actually look at the true impact on your business. So keep an eye out for the alternative tests for the JobKeeper 2.O, because they’re yet to be released and, further detail around the 20-hour rule.
What does that mean for people who are on regular hours or maternity leave, or even business participants, the owner of the business? How does that work with the 20-hour rule? There’s still a few details to emerge there. We’re expecting late August or early September for these things to be clarified.
So let’s get ready for JobKeeper 2.O, work out if you’re eligible, and always reach out if you need a hand.
If you need to have a chat with an accountant book in a strategy call at https://inspire.accountants/chat
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