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JobKeeper extended to March 2021 with adjusted eligibility and reduced payments

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On 21 July, Prime Minister Scott Morrison announced that the JobKeeper wage subsidy will be extended by six months to March 2021, with lower payment rates and additional eligibility testing.

The extension will support eligible businesses – including sole-traders – and not-for-profits which continue to be significantly impacted by COVID-19. It comes after a Treasury review found a “strong case” to extend JobKeeper.

Since launching on April 8, the $1500 per fortnight JobKeeper wage subsidy is currently paid to 960,000 employers, who pass the payment onto 3.5 million employees. The Treasury estimates the number of employees covered will fall to 1.4 million by Christmas.

How will the JobKeeper payment rate change?

There will be two extension periods, each introducing a lower payment rate for employees. The first will run from 28 September 2020 to 3 January 2021 and the second from 4 January 2021 to 28 March 2021.

Two tiers of JobKeeper will also be introduced for employees, based on hours worked in the four weeks before 1 March or 1 July 2020. The eligibility rules for employees remain unchanged.

From 28 September 2020, employees who worked:

  • 20 or more hours per week will receive $1,200 per fortnight, decreasing to $1,000 per fortnight from 4 January to 28 March 2021.
  • Fewer than 20 hours per week will receive $750 per fortnight, decreasing to $650 per fortnight from 4 January to 28 March 2021.

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What are the adjusted eligibility requirements?

Businesses (including sole-traders) and not-for-profits will need to reapply for JobKeeper at the end of September and again in January, proving that their turnover has significantly declined.

To be eligible for JobKeeper from 28 September, you need to demonstrate a decline in turnover in the three months to the end of September 2020, compared to the same period last year.

To be eligible from 4 January to 28 March 2021, you need to demonstrate a decline in turnover in the three months to the end of December 2020, compared to the same period last year.

The decline in turnover required remains the same as existing rules, namely:

  • 30 percent for those with an aggregated turnover of $1 billion or less; or
  • 15 percent for not-for-profits

Please visit the Treasury site for more information on JobKeeper extension eligibility requirements and payment rates.

Are you prepared for a possible JobKeeper audit?

While the ATO has committed to taking an “understanding and sympathetic” approach to JobKeeper compliance, it has made it clear it will “conduct compliance and audit activities to ensure the JobKeeper Payment is passed on to employees, as well as to swiftly and effectively address attempted fraud and any other abuse of the scheme.”

Tracking JobKeeper payments through Single Touch Payroll (STP) is one of the main ways the ATO will ensure employers are compliant. In addition to a range of data-matching tools, STP will allow the ATO to identify when an employer has made over or under payments, incorrectly declared how many employees they are applying for, or when they have not correctly nominated employees.

It’s therefore essential for every business to double check its eligibility for JobKeeper, as well as for its employees. It’s also critical for businesses to maintain documentation and records substantiating information they provided to the ATO in their JobKeeper applications, and to have these documents available in the event of an audit by the ATO.

According to the Treasury, businesses “are required to retain records to allow any information provided to the Tax Commissioner to be verified for five years after it is provided in relation to a payment.”

You can find further guidance from the ATO on its Jobkeeper integrity measures here.

eBook: Guide to payroll compliance 2021

Download our ebook to get up to speed on the 3 biggest compliance obligations facing Australian businesses in the coming year. You'll also learn 5 tips to help stay on top of ever-changing compliance obligations.

Download eBook

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