After 6 months of the JobKeeper scheme (JobKeeper 1.0), the extension to the scheme – labelled JobKeeper 2.0, begins today and runs until 28 March 2021. We summarise the main elements of, and qualification requirements for, JobKeeper 2.0 below

JobKeeper 2.0 picks up many elements from JobKeeper 1.0 that we summarised here and here.

Decline in turnover test

For entities that qualified for JobKeeper 1.0, a new decline in turnover test applies. The test compares:

current GST turnover for the September 2020 quarter with the comparable quarter in 2019 to determine eligibility for fortnightly JobKeeper 2.0 payments from 28 September 2020 to 3 January 2021 (extension 1); and
current GST turnover for the December 2020 quarter with the comparable quarter in 2019 to determine eligibility for fortnightly JobKeeper 2.0 payments from 4 January 2021 to 28 March 2021 (extension 2).

The test can be either the basic test – 15%, 30%, or 50% decline - or an alternative test (see below).

In a change from JobKeeper 1.0, GST registered entities calculate GST turnover for both quarters based on how – cash basis or invoice (accruals) basis - the entity reports turnover in its business activity statement (BAS) (JobKeeper 1.0 allowed the entity to choose a different method to that used in the BAS). Entities not registered for GST can choose to use either the cash or invoice basis to calculate GST turnover for JobKeeper 2.0.

If an entity does not satisfy the decline in turnover tests for either JobKeeper 2.0 extension 1 or extension 2, the entity cannot claim JobKeeper 2.0 payments in the relevant extension period. An entity that is not eligible for JobKeeper 2.0 extension 1, but qualifies for extension 2, does not not have to re-enrol.

An entity that did not enrol in JobKeeper 1.0 must also meet the tests under that scheme in addition to the JobKeeper 2.0 tests for the September 2020 and December 2020 quarters.

JobKeeper 2.0 payment rate

JobKeeper 1.0 provided a payment of $1,500 per fortnight for eligible employees. JobKeeper 2.0 has a ‘two-step two-tier’ payment mechanism:

JobKeeper 2.0 fortnights from 28 September 2020 to 3 January 2021:
- employee or business participant worked for 80+ hours in a four-week reference period: $1,200 per fortnight; or
- employee or business participant worked for <80 hours in a four-week reference period: $750 per fortnight;

JobKeeper 2.0 fortnights from 4 January to 28 March 2021:
- employee or business participant worked for 80+ hours in a four-week reference period: $1,000 per fortnight; or
- employee or business participant worked for <80 hours in a four-week reference period: $650 per fortnight

For employees, hours include hours worked, on paid leave, and public holidays. For business participants, the test refers to hours of active engagement in the business.

There are two standard four-week (28 day) reference periods for employees. If both apply, the higher. The reference periods are the last two consecutive fortnightly pay periods or the last four weekly pay periods ending:

before 1 March 2020; or
before 1 July 2020.

For a monthly pay cycle, employee hours are applied on a pro rata basis to determine the hours attributable to the 28-day period. For business participants the standard reference period is February 2020 (29 days).

The Australian Taxation Office (ATO) has determined that in certain circumstances alternative reference periods can apply:

where employee hours in the standard reference period are not representative of a typical 28-day period, the employer can look at the most recent 28-day period before the standard reference period where the circumstances affecting the number of hours did not exist;
where an employee was not employed during all the standard reference period, employers can use the first 28-day period after the standard reference period where the employee was employed for the whole period; or
for an employee of a business that changed hands, the employer can use the first 28-day period after the standard reference period where the employee was employed for the whole period.

Where there are no records or incomplete records of hours, including where remuneration is not tied to hourly or contracted rates, the following alternative methods are available to determine whether an employee qualifies for the higher rate of $1,200 (or $1,000):

excluding amounts paid to meet the JobKeeper 1.0 ‘wage condition’, the wage paid to the employee for the reference period was at least $1,500;
the employee’s employment contract or award required the employee work at least 80 hours during a reference period; or
it can be determined using reasonable assumptions that the employee’s hours were 80 or more during a reference period.

For business participants, similar alternative reference periods to those for employees will apply to business participants where relevant and also for businesses affected by drought or other natural disaster.

Alternative turnover tests

The alternative tests for JobKeeper 2.0 are similar to those for JobKeeper 1.0 that we discussed here but with some amendments to adjust for differences in JobKeeper 2.0:

entity commenced business: the tests are largely unchanged;
sole trader or small partnership with sickness, injury, or leave: the tests are largely unchanged;
disposals, acquisitions, or restructures: these tests have been amended to allow flexibility to choose to apply the test to each event - disposal, acquisition, or restructure - separately to avoid entities having to choose a month that may fall within a period impacted by COVID-19;

substantial increase in turnover or irregular turnover: under JobKeeper these tests required the change in turnover to occur over the relevant period until the month prior to the turnover test period. While this still applies, an entity can also choose to apply this test if the change in turnover occurred in the period prior to 1 March 2020 to avoid having to use a period affected by COVID-19;
affected by drought or natural disaster: all the alternative tests allow an entity to choose to exclude bushfire or drought affected months from comparison calculations and use earlier months (under JobKeeper this was not a choice).

The alternative tests also allow a selected month to be multiplied by three to establish the comparable quarter for comparison.

Other eligibility requirements

Entities do not need to enrol for JobKeeper 2.0 but need to notify the ATO of eligible employees, business participants, and their payment rates. Business participants also need to make a declaration if their active engagement in the business exceeds 80 hours in a reference period.

Once the entity notifies the ATO, the entity must notify the employee or business participant within 7 days of the payment rate sent to the ATO.

From the fortnight beginning 3 August 2020, employees can be eligible employees for JobKeeper 1.0 and JobKeeper 2.0 if they were either:

a full-time or part-time employee on 1 July 2020; or
a long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer.

This brings in employees that after 1 March 2020 and by 1 July 2020:

started employment (if full-time or part-time employees);
reached 12 months of casual employment;
turned 18 years of age (and were not previously eligible);
are aged 16 or 17 years and have started living independently or have ceased full time study; or
became permanent residents or holders of a Subclass 444 (Special Category) visa.

Other eligibility requirements – including the wage condition - remain the same as for JobKeeper 1.0. Entities have until 31 October 2020 to meet the wage condition for the fortnights starting 28 September and 12 October 2020.

The ATO updates its website regularly for changes to JobKeeper 2.0 including its administration of the scheme.

For more information on JobKeeper 2.0, please contact:

Neil Brydges
Principal Lawyer | Accredited Specialist in Tax Law
M +61 407 821 157 | T +61 3 9611 0176
E nbrydges@sladen.com.au

Daniel Smedley
Principal | Accredited Specialist in Tax Law
M +61 411 319 327| T +61 3 9611 0105
E: dsmedley@sladen.com.au

Rob Warnock
Principal Lawyer
M +61 419 892 115 | T +61 3 9611 0155
E: rwarnock@sladen.com.au