JobKeeper Wage Subsidy Has Been Extended to March 2021
The original JobKeeper was to end in September 2020 and has been extended to March 2021. There has been some changes made to the scheme.
The key points are:
- Two tiered system of payments: High and Low
- New business eligibility requirements but employee eligibility remains unchanged
JobKeeper Two Tiers of Payments – High and Low
Many small business owners would be well aware of the current $1,500 JobKeeper payment which, in a few cases, discouraged employees from working their normal or additional hours. The tiered payments are a response to this concern as well as addressing the financial impact of the payment. The basics are:
- If an employee worked greater than 20 hours per week in the four weeks preceding 1-Mar-2020 then they are in the “high tier”. This means:
- The subsidy is $1,200 per fortnight (down from $1,500) until 3-Jan-2021;
- After 3-Jan-2021 and until 28-Mar-2021 the payment will be $1,000 per fortnight.
- If an employee worked less than 20 hours per week in the four weeks preceding 1-Mar-2020 then they are in the “low tier’. This means:
- The subsidy is $750 per fortnight until 3-Jan-2021; and
- After 3-Jan-2021 and until 28-Mar-2021 the payment is $650 per fortnight.
The intent is to taper the payment so that businesses will become less reliant on government support but not cause a fiscal cliff.
New Business Eligibility Requirements for JobKeeper
Employee eligibility requirements for JobKeeper have not changed. The impact on businesses are:
- No change to the revenue reduction of 30% year on year (for businesses with less than $1b revenue).
- HOWEVER, forecasted revenue decline has been replaced with a requirement to demonstrate actual declines in the relevant quarters which are Q4FY20 (Apr-Jun 2020) and Q1FY21 (Jul-Sep 2020).
- Re-assessments happen at the end of September 2020 and again in January 2021.
- The year on year revenue reduction assessment can be replaced by alternate methods by the ATO if year on year is not an appropriate measure
People with JobSeeker eligibility can earn up to $300 per week and remain eligible for the full payment. This might encourage people to take up part-time or casual work with small business as we move through the recovery.
Things for Business Owners to Think About
- What is my labour requirement between now and March 2021? Dust of your crystal ball and start thinking about the net impacts of new business and reductions will have on your working hours requirements. Consider making a rough map of your forecasts on a weekly basis out to 31-Mar-2021.
- Check your revenue forecast for the Q1FY21 is tracking below the 30% threshold
- Is there any opportunity to access the candidate pool created by the lifting of the JobSeeker earnings limit? This may give you access to talented people that were not previously in a position to take up part-time or casual work. You may want to consider utilising fixed term or fixed task contracts that end in March 2021.
- Talk to you accountant to make sure that you have no nasty surprises coming arising from JobKeeper payments or your method of calculation
More information on the JobKeeper Extension is available from the Treasury Minister’s website
Sage Business Group has published a with a great explanation of the GST revenue calculation