The New Rules have confirmed that several elements of the JobKeeper program will remain the same. Importantly:

• the decline in turnover threshold, being that GST turnover has fallen or will likely fall by 50% or 30% (depending on the size of the entity’s aggregated turnover, and with a separate 15% threshold for certain not-for-profits);
• the status of ‘eligible employees’, which continue with the business and meet a range of criteria, including the updated reference date being 1 July 2020;
• any elections previously made under the JobKeeper scheme (including in relation to charities); and
• other requirements, such as the ‘wage condition’ and record-keeping obligations.

The Australian Taxation Office (ATO) has also stated that various administrative aspects of the program will remain the same, including:

• entities will not need to re-enrol for the extension periods if they are already enrolled for JobKeeper before 28 September 2020;
• entities do not need to reassess employee eligibility or ask employees to agree to be nominated by their eligible employer, if the employer is already claiming JobKeeper for them before 28 September 2020; and
• performing the monthly business declaration, which is how entities will confirm that they continue to remain eligible for the relevant extension periods.

Furthermore, entities will still be able to participate in JobKeeper during the extension period even if they have not previously enrolled in the program, subject to meeting the eligibility criteria.

What’s new?

The New Rules require that the decline in turnover tests be re-applied for entities to remain eligible for both Extension Period 1 and Extension Period 2.

These tests will compare actual GST turnover figures, rather than using a projected GST turnover figure like the existing program.

Entities must meet the relevant decline in GST turnover according to the table below to remain eligible:

Like the existing rules, the relevant comparison period will generally be the corresponding quarter in 2019. This is unless an alternative period is determined by the Commissioner.

For the purposes of the new GST turnover tests, the Commissioner has been given the power to determine that certain supplies or classes of supplies are to be treated as being made at a particular time. This is intended to operate so that the Commissioner can apply the GST attribution rules to certain supplies, if appropriate.

The ATO has stated that entities will be required to provide information to demonstrate that they satisfy the new GST turnover tests. This differs from the current program. For Extension Period 1, the relevant information can be provided to the ATO from the start of October and must be submitted before entities complete their November business declaration.

Payment rate

The JobKeeper payment will move to a two-tiered system that depends on the number of hours worked by an eligible employee in a certain period. The payment rates also differ between the extension periods, as outlined below:

The higher rate applies to an eligible employee if:

• in the 28-day period concluding at the end of the employee’s most recent pay cycle that ended prior to 1 March 2020 or 1 July 2020,
• the employee’s total hours of work, paid leave and paid absence on public holidays in the individual’s employment with that entity was 80 hours or more.

In determining which reference period is to be applied (either 1 March 2020 or 1 July 2020), the one with the higher number of hours is to be used for a particular employee.

For employees who are paid other than on a weekly or fortnightly basis, the 28-day period may only cover a part of the pay cycle. The New Rules ensure that average hours over the pay period are identified on a pro-rata basis.

The Commissioner also has the power to determine alternative tests in relation to the number of hours worked by an employee to determine which payment tier applies.

In relation to the relevant payment, employers will be required to:

• notify the Commissioner of the rate that applies to any eligible employees;
• notify the relevant employees of their applicable rate; and
• pay eligible employees equal to, or greater than, the relevant amount of the JobKeeper payment (before tax) to meet the ‘wage condition’.

Some uncertainties remain

There are certain matters which remain unclear. These include:

• the status of the existing alternative decline in turnover tests made by the Commissioner;
• the status of the existing administrative concessions by the Commissioner, such as those relating to the figures used for performing the GST turnover tests; and
• the scope of the Commissioner’s discretion to set out alternative tests in view of the New Rules, such as for decline in turnover and employee hours worked.

These questions will hopefully be determined by future announcements made by the ATO. We are monitoring any updates which may clarify some of these issues.

As with the existing program, it may also be possible for further variations to be made to the New Rules as certain issues unfold with the extended program.

It may be the case that the issues will need to be addressed directly with the ATO, in view of the powers granted to the Commissioner to make alternative arrangements in some cases.

What you need to do next

The ATO has helpfully recommended that entities undertake the following tasks from 28 September 2020:

• work out which payment rate applies to each eligible employee;
• notify the Commissioner and eligible employees what payment rate applies to them;
• during the extension periods, ensure eligible employees are paid at least their correct payment rate; and
• if an entity is registered for GST and has outstanding BAS statements, lodge the statements for the July to September 2019 and October to December 2019 quarters as soon as possible (or for equivalent months, if reporting monthly).

We further recommend that entities begin preparing the relevant information to be submitted to the ATO in order to demonstrate the satisfaction of the GST turnover test for Extension Period 1.

We would be pleased to work with you in relation to any queries or issues you may have regarding the extended program.