Your guide to JobKeeper 2.0

Published on 18 August 2020

Photo: by StellrWeb (via Unsplash)

At the end of September, the federal government’s JobKeeper scheme to support businesses and employees affected by the pandemic will be changing. How does it affect you, and how can you be ready?

That was the topic of our August industry forum for the hospitality industry. JobKeeper has been a lifeline for many restaurants and other parts of the hospitality trade, helping to keep staff in jobs and allowing businesses to remain open. The extension of the scheme to March 2021 is welcome news, but with new eligibility tests and payment rates commencing next month, there are many questions.

To guide us through the changes we asked accounting services firm On Tap Hospitality to offer their advice and information. Chartered accountant and director of On Tap, Freddie Deegan, brought his 10 years of experience to the forum, with his colleagues Jae Debrincat, Andrew Nutman and Tony Principe taking questions from attendees. Here are the main points Deegan outlined.

Note: legislation regarding the extension of JobKeeper hasn’t been passed. All of the information here is advice from On Tap based on the government proposal as it stood on 17 August 2020.

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Currently participating in JobKeeper?

The most immediate thing you need to do is register any full-time or part-time employees who joined your business between 1 March 2020 and 1 July 2020. Under recent changes to the scheme, they are now eligible for a number of JobKeeper 1.0 payments in August and September. Long-term casuals whose 1-year anniversary occurs between 1 March 2020 and 1 July 2020 are also eligible (if they’ve been working regularly and systematically).

Want to join JobKeeper?

You can apply for the current JobKeeper scheme up until 28 September. However, you will have to requalify for JobKeeper 2.0.

Eligibility after 28 September

This is the date that JobKeeper 2.0 kicks in. Any business who wishes to receive JobKeeper after September will need to requalify. Being a current JobKeeper recipient does not mean you get rolled over onto the next phase.

JobKeeper’s extension is split into two different phases, with different payment rates and eligibility criteria for each phase.

Phase 1 covers 28 September 2020 to 3 January 2021 and is called the December Phase.

Phase 2 covers 4 January 2021 to 28 March 2021 and is called the March Phase.

The eligibility criteria for a business is a 15, 30 or 50 per cent decline in actual GST turnover for the previous quarter, compared to the same time last year. The amount depends on your aggregate turnover or whether you’re a charity. Businesses will be assessed twice: in September to qualify for the December phase and in December to qualify for the March phase.

Deegan provided this example of a business that qualifies for the December phase:

Payment rates after September

The rate of the JobKeeper subsidy will decline from its current levels of $1,500 each fortnight for all employees, with a gradual stepping down of the payment in phase 1 and phase 2. The breakdown of the payment rates from 28 September onwards is:

Phase 1: September 2020 to January 2021

Tier 1 employees (those working more than 20 hours per week): $1,200

Tier 2 employees (working less than 20 hours per week): $750

Phase 2: January 2021 to March 2021

Tier 1 employees (those working more than 20 hours per week): $1,000

Tier 2 employees (working less than 20 hours per week): $650

The Tier that an employee falls into is based on the 4-week period immediately before they qualified for JobKeeper. This could be 4 weeks prior to 1 March 2020 or 4 weeks prior to 1 July 2020, depending on when they became an eligible employee of your business. Find out more.

Actions businesses should take now

Deegan’s main piece of advice was to get on the front-foot with your JobKeeper administration. Don’t wait until the last minute. If you don’t have records or are unsure of anything, speak to your accountant. They’re there to help.

He provided a checklist of actions for businesses to take now:

  • Identify any employees who are now eligible to join JobKeeper 1.0 (i.e. they qualified after 1 March 2020)
  • Determine which Tier your employees will fall into under JobKeeper 2.0 from a) those employees who were eligible at 1 March (use February payroll records) and b) those employees who were eligible at 1 July (use February and June payroll records)
  • Ensure your financial reporting will allow prompt comparison of actual September 2020 quarterly decline in GST turnover versus September 2019
  • Check all your supporting documentation to ensure you’re ready for any ATO review including JobKeeper nomination notices, accounting records and lodgment receipts

Deegan’s other major piece of advice was to submit your August lodgments on 1 September. August is a three-fortnight month, so the payroll for the month will be a big hit to your cashflow. Lodging on 1 September will ensure funds are received prior to the following payroll.

FAQs

Durng the forum, Deegan also answered some of the most common questions he gets from businesses about JobKeeper.

Are there any reasons a business shouldn’t participate in JobKeeper?

If you feel that your business may not be able to pay the required employee wages upfront and wait for the JobKeeper subsidy to come into your bank account, you may be deterred from participating. But Deegan encouraged businesses to explore other options, such as relief or loans from their banks, to help with cashflow and allow them to participate. Businesses that are involved in JobKeeper also qualify for the commercial rent relief scheme and other forms of support.

What if I’ve had peaks and troughs in my actual turnover?

The turnover is looked at per quarter, so one particularly strong month followed by two soft months may not disqualify you. The other good piece of news is that June 2020 – a strong month for many Victorian businesses with the easing of restrictions – has now been removed from the assessment period.

Can I pay JobKeeper to some employees only?

No. The only reason an employee wouldn’t receive JobKeeper is if they don’t meet the government’s eligibility criteria. If your business is registered to participate in JobKeeper, every eligible employee must be given the payment.

What do I need to know as an employee?

From 28 September, it’s likely that your payment rates will reduce. It’s important to check what those rates are now and plan ahead. This is particularly important for employees who were earning less than $1,500 each fortnight before March, but have been receiving that amount via JobKeeper for the last six months. Look at what your weekly budget was pre-March and ensure you’ll be able to return to those levels of spending.

More information on JobKeeper is available from the Australian Taxation Office and The Treasury.