Author: thriveadmin

[lwptoc]

The Coronavirus Economic Response Package (Jobkeeper Payments) Amendment Act 2020 (the Act) received Royal Assent on 3 September 2020.

The Act makes amendments to various legislation to:

1. extend the JobKeeper scheme to 28 March 2021;
2. amend the tax secrecy rules in the TAA to allow the ATO to disclose JobKeeper-related information to Australian government agencies for law enforcement purposes;
3. extend most of the temporary JobKeeper flexibility provisions in the Fair Work Act 2009 (the FW Act) to 28 March 2021; and
4. from 28 September 2020, ensure that:

• ‘qualifying employers’ who are eligible for JobKeeper can access the full range of Fair Work flexibility provisions; and
• ‘legacy employers’ who are no longer eligible for JobKeeper but who obtain a certificate from an accountant or a tax agent stating that they had experienced a 10 per cent decline in turnover for the preceding quarter can access a modified range of Fair Work flexibility provisions.

This article briefly outlines each of these changes, including how accounting and tax practitioners will play a central role in the new Fair Work rules.

Extending the JobKeeper scheme

The Act amends the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (the Payments and Benefits Act) to authorise the Government to make JobKeeper payments in relation to a time between 1 March 2020 to 28 March 2021. Previously, the Government was only authorised to make payments in relation to a time between 1 March 2020 and 31 December 2020, and the scheme had been scheduled to cease on 27 September 2020. This change will extend the scheme to 28 March 2021, as previously announced on 21 July 2020.

The operational JobKeeper rules are contained in the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the JobKeeper Rules). Under the revised Payments and Benefits Act, the Treasurer is now empowered to register a Legislative Instrument to amend the JobKeeper Rules to give effect to the other changes to the scheme — as proposed in the Treasurer’s announcements on 21 July 2020 and 7 August 2020 — for the period 28 September 2020 to 28 March 2021.

Allowing the ATO to disclose JobKeeper information to government agencies

The tax secrecy provisions in Subdiv 355-B of Schedule 1 to the TAA makes it an offence for an ATO officer to make a record of, or disclose, protected information. Protected information is generally information that relates to the affairs of an entity and identifies, or is reasonably capable of being used to identify, that entity, where that information was disclosed or obtained under or for the purposes of a taxation law.

There are exceptions to the offence. The Act inserts a new exception, so that an ATO officer is permitted to disclose protected information to an Australian (i.e. Commonwealth, State or Territory) government agency for the purposes of the administration of an Australian law.

The objective of the new exception is to assist other agencies administer programs relating to the Coronavirus. Therefore such disclosures must be for a purpose that relates to the Coronavirus to qualify for the exception. The amendments:

• facilitate information sharing at the request of a State or Territory agency; and
• allow the Department of Social Services to request information for compliance checks in relation to a payment made under the JobKeeper scheme,

until 28 March 2021.

Extending the temporary Fair Work provisions

When JobKeeper was introduced, new Part 6-4C was inserted into the FW Act. The provisions allow an employer who qualifies for the JobKeeper scheme to temporarily vary the working arrangements of employees for whom the employer is receiving the JobKeeper payment, subject to a range of safeguards. Part 6-4C was originally set to be repealed on 28 September 2020.

The Act extends the temporary FW Act provisions — relating to JobKeeper enabling directions and JobKeeper stand down directions — until 28 March 2021, with the exception of the annual leave provisions (see below) which will be repealed on 28 September 2020. The protections and safeguards in the FW Act will also be extended.

The Act creates two categories of employers — which the Explanatory Memorandum describes as ‘qualifying employers’ and ‘legacy employers’ — for the purposes of determining which temporary flexibility provisions can be accessed from 28 September 2020. Employers which fall into neither category cannot access any of the temporary provisions.

Current temporary Fair Work flexibility measures

Broadly, the FW Act enables employers that qualify for JobKeeper to:

• change an eligible employee’s usual duties;
• change an eligible employee’s location of work;
• agree with an eligible employee to change their days and times of work; or
• reduce an eligible employee’s hours or days of work (including to no hours),

in certain circumstances.

Currently, the Fair Work JobKeeper provisions also allow a qualifying employer to:

• request an eligible employee to take paid annual leave (as long as they keep a balance of at least two weeks); and
• agree in writing with an eligible employee for them to take annual leave at half pay for twice the length of time.

Reference
See the Fair Work Ombudsman website for information about the temporary Fair Work rules.

Employer access to Fair Work flexibility measures from 28 September 2020

Qualifying employers — access to all flexibility measures

A ‘qualifying employer’ is an employer that is entitled to a JobKeeper payment for an employee after 27 September 2020.

From 28 September 2020, qualifying employers will retain access to the full range of Fair Work flexibility measures. That is, the employer can give that employee JobKeeper enabling directions and a JobKeeper enabling stand down direction. As noted above, the annual leave provisions will be repealed on 28 September 2020.

Legacy employers — access to modified flexibility measures

A ‘legacy employer’ is an employer that previously received one or more JobKeeper payments for an employee but loses eligibility after 27 September 2020, and has suffered a 10 per cent decline in turnover for the relevant test quarter.

From 28 September 2020, legacy employers will have access to modified Fair Work flexibility measures. The employer can:

• give that employee JobKeeper enabling directions in relation to duties and location of work;
• reach agreements with that employee around days and times of work; or
• give that employee a JobKeeper enabling stand down direction to reduce that employee’s ordinary hours to a minimum of 60 per cent of the employee’s ordinary hours as they were at 1 March 2020, provided the relevant criteria for issuing the direction are met.

Such an agreement or direction cannot result in the employee working less than two hours in a day.

Legacy employers must also give a longer period of notice before giving a JobKeeper enabling direction — seven days rather than three, and have expanded consultation requirements.

The 10 per cent decline in turnover test

The 10 per cent decline in turnover test for legacy employers will mirror the decline in turnover test in the JobKeeper Rules, with the following modifications:

• the turnover test period is the quarter set out in the table below;
• current GST turnover is used instead of projected GST turnover; and
• the specified percentage is 10 per cent for all employers instead of 50 per cent, 30 per cent or 15 per cent.

Note:
The Government has proposed to amend the decline in turnover test for determining JobKeeper eligibility from 28 September 2020. These changes to the JobKeeper Rules have not yet been introduced.

The following table sets out the designated quarter in respect of which the decline in turnover test applies for a specified time:

These dates align with the Business Activity Statement lodgment dates for each quarter, and not with the application of the JobKeeper eligibility decline in turnover test.

It is important to remember that the 10 per cent decline in turnover test must be satisfied each quarter.

The tax practitioner or accountant’s role

In order to qualify as a legacy employer, an employer — other than a small business employer — must obtain a written ’10% decline in turnover certificate’ (a certificate) from an ‘eligible financial service provider’.

An ‘eligible financial service provider’ means:

• a registered tax agent or BAS agent; or
• a qualified accountant (under the Corporations Act 2001).

A certificate can only be issued by a financial service provider that is independent of and external to the employer. An eligible financial service provider cannot issue a certificate in relation to an employer if the provider is:

• a director, employee or associated entity of the employer; or
• a director or employee of an associated entity of the employer.

The certificate must confirm that the employer satisfied the 10 per cent decline in turnover test for the designated quarter applicable to a specified time.

If a legacy employer does not obtain a certificate for the next period, then any directions or agreements in place cease to operate after the current period, and the employer cannot give new directions or reach new agreements with their employees unless they obtain the required certificate.

Importantly the 10 per cent decline in turnover certificate will be required for each quarter to ensure that the direction or agreement continues in effect through the next period.

Small business employers

A small business employer — which broadly means an employer with fewer than 15 employees — may choose to make a statutory declaration to the effect that the employer satisfied the 10 per cent decline in turnover test for the designated quarter applicable to a specified time. The small business employer can still elect to obtain a certificate.

Further JobKeeper training

Upcoming webinar
Interested in learning more about the JobKeeper extensions? Join two of our Senior Tax trainers on Wednesday, 16 September. We’ll cover:

• • the proposed JobKeeper 2.0
  • the Fair Work 10 per cent decline in turnover test for legacy employers
  • the tax practitioner’s role in assisting legacy employers
  • and more

You can learn more about JobKeeper Extended here or through the link below.

[lwptoc]

Changes to employee eligibility for JobKeeper

The JobKeeper scheme is currently legislated to end on 27 September 2020. On 21 July 2020, the Government announced that due to the ongoing COVID-19 crisis, the JobKeeper Payment scheme will be extended by six months until 28 March 2021, with changes to the payment rates and the entity decline in turnover eligibility test.

On 7 August 2020, the Treasurer announced further changes to increase access to the scheme, driven by the ongoing crisis and the implementation of Stage 4 business restrictions in Victoria. Relevantly, this second announcement included that from Monday 3 August 2020, the employee eligibility reference date will move from 1 March 2020 to 1 July 2020.

On 14 August 2020, the Treasurer registered a Legislative Instrument titled Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 7) 2020 (the Amendment Rules). The Amendment Rules amend the Legislative Instrument containing the JobKeeper Rules to change the employee eligibility reference date from 1 March 2020 to 1 July 2020. The stated purpose of the Amendment Rules is to extend the scope of the wage subsidy support so that it also benefits employers of more recently engaged employees.

The other changes announced on 21 July 2020 and 7 August 2020 will be included in separate amendments.

Also on 14 August 2020, the ATO confirmed that it will allow employers until Monday 31 August 2020 to meet the wage condition for, and to enrol, employees who are newly eligible for JobKeeper under the 1 July 2020 eligibility test.

This article outlines the effect of the Amendment Rules. Previous Banter Blog articles summarise the operation of the current JobKeeper scheme and the proposed changes.

Important
The Amendment Rules only changes the eligibility reference date for employees and not for business participants and religious practitioners.

The new eligibility reference date

JobKeeper fortnights ending on or before 2 August 2020 — the previous eligibility criteria

For JobKeeper fortnights ending on or before Sunday 2 August 2020, an individual was an eligible employee of their employer for a fortnight where they satisfied the following requirements:

• the individual was employed by the entity at any time in the fortnight — including those stood down or re-hired;
• on 1 March 2020 — the individual was aged 18 or over (or if they were 16 or 17 years old on 1 March 2020 — they were independent or not undertaking full-time study);
• on 1 March 2020 — the individual was either a full-time, part-time or fixed-term permanent employee, or a long-term casual employee;
• on 1 March 2020 — the individual was either an Australian resident for social security law purposes, or a tax resident and held a special category Subclass 444 visa;
• the individual agreed to be nominated by the employer as an eligible employee; and
• the individual did not receive the Government’s paid parental leave or dad and partner pay, or workers’ compensation payments for total incapacity for work, at any time during the fortnight.

JobKeeper fortnights starting on or after 3 August 2020

When do the changes apply?

The Amendment Rules have changed the eligibility reference date for employees for JobKeeper fortnights commencing on or after Monday 3 August 2020.

The revised reference date applies to:

• the final four fortnights of the current JobKeeper scheme — i.e. the fortnights commencing 3 August, 17 August, 31 August and 14 September 2020; and
• the proposed extended JobKeeper scheme — i.e. all fortnights from 28 September 2020 to 28 March 2021.

The revised eligibility criteria

The revised eligibility criteria are as follows:

• the individual is employed by the entity at any time in the fortnight — including those stood down or re-hired;
• on 1 July 2020 — the individual was aged 18 or over (or if they were 16 or 17 years old on 1 July 2020 — they were independent or not undertaking full-time study);
• on 1 July 2020 — the individual was either a full-time, part-time or fixed-term permanent employee, or a long term casual employee;
• on 1 July 2020 — the individual was either an Australian resident for social security law purposes, or a tax resident and held a special category Subclass 444 visa;
• the individual agrees to be nominated by the employer as an eligible employee; and
• the individual does not receive the Government’s paid parental leave or dad and partner pay, or workers’ compensation payments for total incapacity for work, at any time during the fortnight.

Which employees will the changes affect?

The amendments allow employees who are not eligible under the former 1 March 2020 test date, but are now eligible under the 1 July 2020 reference date, to be enrolled for JobKeeper for fortnights commencing on or after 3 August 2020.

Affected employees include those who:

• did not meet the definition of a ‘long term casual employee’ as of 1 March 2020, but have since met the definition by 1 July 2020 — this group will mainly comprise casual employees who commenced with the employer between 3 March 2019 and 2 July 2019;
• turned 18 years old between 2 March 2020 and 1 July 2020;
• turned 16 years old, and were living independently or not undertaking full-time study, between 2 March 2020 and 1 July 2020;
• were 16 or 17 years old on 1 March 2020, but started living independently or stopped undertaking full-time study between 2 March 2020 and 1 July 2020; or
• became either an Australian resident for social security law purposes, or a tax resident and holding a special category Subclass 444 visa, between 2 March 2020 and 1 July 2020.

ATO example — Long term casual employee

On 1 June 2019, Kym began working as a casual barista at Top Cafe. During the period of 12 months that ended on 1 July 2020, she regularly worked shifts on Friday and Saturday mornings and occasionally worked shifts on other days. Although Kym may have worked different numbers of hours each week, Kym can be considered to be a long-term casual employee of Top Cafe because, on 1 July 2020, she was employed on a regular and systematic basis for a period of 12 months.

Source: ATO fact sheet ‘Long term casual employees’ (QC 63423)

Note
The ATO has updated its web guidance to state that the long term casual employee test requires that the employee was employed on a regular and systematic basis for the period 2 July 2019 to 1 July 2020.

Do the changes affect employees who qualified based on the 1 March 2020 test date?

No. Individuals who satisfied the 1 March 2020 requirements under the previous law do not need to retest (and potentially lose) their eligibility under the new rules. That is, their eligibility is preserved, regardless of any change in circumstances by 1 July 2020 which would otherwise make them ineligible based on a 1 July 2020 test date.

Examples include:

Example —  employee re-hired

HYLT Pty Ltd qualified for JobKeeper payments for four eligible employees for the JobKeeper fortnight beginning 30 March 2020 and later fortnights.

After the end of the third JobKeeper fortnight, one of the eligible employees, Rosie, left HYLT Pty Ltd due to the lack of business for HYLT Pty Ltd and to pursue another opportunity. During this later time, HYLT Pty Ltd qualified for JobKeeper payments for only three eligible employees.

On 28 July 2020, Rosie returned to HYLT Pty Ltd and resumed ongoing full‑time employment. Further, Rosie was not eligible to renominate as an eligible employee of another qualifying entity.

For JobKeeper fortnights beginning on or after 3 August 2020, despite Rosie not meeting the 1 July 2020 requirements, HYLT Pty Ltd can qualify for the JobKeeper payment in respect of Rosie as a 1 March 2020 employee under the Rules. This is because Rosie’s eligibility based on the 1 March 2020 requirements was preserved since she was an eligible employee of HYLT Pty Ltd for a JobKeeper fortnight ending on or before 2 August 2020 and she did not qualify as an eligible individual of another qualifying entity.

Source: Example 4 from the Explanatory Statement

The ‘one in, all in’ rule

The JobKeeper Rules require that an employer must give every eligible employee the choice to be nominated, i.e. by providing them with a nomination notice. This is commonly known as the ‘one in, all in’ rule. The Amendment Rules effectively ensure that this rule will also apply to an employer in respect of all their employees who are eligible under the 1 July 2020 test date, other than those who had already been given this choice.

Re-nomination exception

The Amending Rules make changes to the nomination requirements. The former requirements effectively prevented eligible individuals from nominating for the JobKeeper scheme for more than one entity. The amendments provide an exception to this restriction. Under the exception an individual who has nominated with one entity as an eligible employee or an eligible business participant can re-nominate as an eligible employee of another entity in limited circumstances.

To re-nominate, the individual must have:

• ceased their employment, or active engagement, with the first entity before 1 July 2020; and
• commenced their employment with the new entity by 1 July 2020.

Important
An individual can only re-nominate as an eligible employee. They cannot re-nominate as an eligible business participant. Further, an individual cannot re-nominate if they were a religious practitioner in relation to either entity.

Example — re-nomination

Lee joins NewJob Inc on 27 June 2020 as a full time employee after leaving his former employer. His former employer qualified for JobKeeper payment in respect of Lee for the JobKeeper fortnight beginning on 30 March 2020 and later fortnights until he left in June. As Lee has left his former employer, his former employer no longer qualifies for the JobKeeper payment in respect of Lee as an eligible employee.

For JobKeeper fortnights beginning on or after 3 August 2020, NewJob Inc can qualify for JobKeeper payments in respect of Lee as an eligible employee because he satisfies the 1 July 2020 requirements. Further, Lee is not excluded from being nominated under the JobKeeper scheme because he left his former employer before 1 July 2020 and was employed by NewJob Inc on 1 July 2020.

Source: Example 2 from the Explanatory Statement

Revised employee nomination notices

The ATO has updated its JobKeeper Employee Nomination Notice to reflect the new eligibility test date of 1 July 2020 and the re-nomination exception.

This updated nomination notice only applies to employees who are enrolled based on the new 1 July 2020 eligibility reference date.

Where all of the following apply in respect of a re-hired employee:

• they were an eligible employee using the 1 March 2020 test;
• they stopped being employed by the employer on or before 1 July 2020;
• they were re-engaged by the employer after 1 July; and
• they had previously provided the employer with an employee nomination notice,

the employee needs to provide to the employer a notice stating whether or not they have given an employee nomination notice to another entity.

The wage condition

The Amendment Rules do not change any of the eligibility criteria for the employer. Relevantly, the entity must meet the wage condition in respect of employees who becomes eligible based on the new 1 July 2020 test date for a fortnight commencing on or after 3 August 2020.

Under the JobKeeper Rules — and not changed by the Amendment Rules — an employer must pay an eligible employee at least $1,500 for the relevant JobKeeper fortnight. The Commissioner has the discretion to allocate an amount paid outside of a particular JobKeeper fortnight to that fortnight, where the regular pay period is longer than a fortnight (e.g. a monthly payrun), or where it is otherwise reasonable in the Commissioner’s opinion to do so.

The ATO is allowing all employers until Monday 31 August 2020 to meet the wage condition for all new eligible employees included under the 1 July 2020 eligibility test. This covers the two fortnights from 3 August to 16 August 2020, and from 17 August to 30 August 2020.

Important
The blanket extension until 31 August 2020 only applies in respect of new employees added as a result of the change of the reference date. It does not apply to already enrolled employees who qualified based on the 1 March 2020 test date.

The ATO generally allows employers to enrol new eligible employees by the end of the calendar month in which they became eligible (although the wage condition must be satisfied for each fortnight subject to the Commissioner’s discretions). Consistent with this general practice, employers may enrol new eligible employees for the August fortnights by 31 August 2020.

Further information

For more on the latest legislation changes, join us for our monthly online tax updates, hosted by some of Australia’s leading tax experts.

We facilitate these online and in locations across Australia (in line with current COVID-19 restrictions).

[lwptoc]

Editor’s notes:
This article was original posted on 22 July 2020 based on the details contained in the Government’s announcement of the extended JobKeeper scheme on 21 July 2020. This article has been subsequently updated to incorporate the changes to the extended scheme announced on 7 August 2020.

The Treasury has updated its fact sheet titled Extension of the JobKeeper Payment (the Fact Sheet) in relation to the extended scheme.

On 14 August 2020, the Treasurer registered the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 7) 2020 which changed the employee eligibility reference date from 1 March 2020 to 1 July 2020 with effect from 3 August 2020. This article has not been updated for this development. See our newest update, JobKeeper employee eligibility date changed to 1 July 2020 for an outline of these amendments.

JobKeeper to be extended to 28 March 2021

On 21 July 2020, the Government announced that due to the ongoing COVID-19 crisis, the JobKeeper Payment scheme will be extended by six months until 28 March 2021, from the original end date of 27 September 2020. The period of the extended scheme comprises 13 fortnights — i.e. the proposed extension exactly doubles the length of the original scheme. From 28 September 2020:

• a two-tier payment rate will apply based on the worker’s average weekly work hours during a reference period;
• the current $1,500 per fortnight payment rate will be reduced on 28 September 2020 and reduced further on 4 January 2021;
• the decline in turnover will be retested on a quarterly basis; and
• the decline in turnover test will be based on actual GST turnover.

On 7 August 2020, the Treasurer announced further changes to increase access to the scheme during the proposed extension period (i.e. 28 September 2020 to 28 March 2021), driven by the ongoing crisis and the implementation of Stage 4 business restrictions in Victoria.

Under these revisions, from 28 September 2020, entities will only have to meet the quarterly decline in turnover test for (broadly) the previous quarter instead of multiple quarters as was originally proposed.

Significantly, from Monday 3 August 2020, the employee eligibility test date will move from 1 March 2020 to 1 July 2020. The new reference date will apply for the last four fortnights of the legislated scheme as well as the duration of the proposed extended period. Staff who were hired after 1 March 2020 may now be eligible for JobKeeper.

The Treasurer’s media release also reports the following anticipated consequences of the revisions to the proposed extended scheme:

• an additional cost of $15.6 billion for a revised total cost of $101.3 billion;
• while the extended scheme will apply nationally, it is expected that more than 80 per cent of the increased payments will be paid to Victorian businesses; and
• around four million Australians will be eligible individuals under the scheme at the end of the September 2020 quarter, falling to around 2.24 million in the December 2020 quarter and 1.75 million in the March 2021 quarter.

The proposed changes to the scheme will be brought into legal effect once the Treasurer registers a Legislative Instrument to amend and/or supplement the Legislative Instrument titled the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the Rules).

Reference — Treasury fact sheet
The Treasury fact sheet (the Fact Sheet) titled Extension of the JobKeeper Payment is available here.

Treasury review

On 21 July 2020, the Treasury also released its findings from its three-month review of the JobKeeper scheme, which it completed in June 2020. The report titled JobKeeper Payment: Three-month review concludes that there is a ‘strong case’ to continue the scheme beyond 27 September 2020 and recommends some changes.

The current JobKeeper rules

For an overview of the existing JobKeeper scheme rules that were announced on 30 March 2020 and the changes which have taken effect since then, refer to our previous Banter Blog articles:

1. The JobKeeper Payment (17 April 2020)
2. JobKeeper — new rules and ATO guidance (8 May 2020)

Some terminology

The following terminology is used in this article for ease of reference as follows:

• the currently enacted JobKeeper scheme period — Monday 30 March 2020 to Sunday 27 September 2020 — is referred to as the ‘current scheme’;
• the proposed extended JobKeeper scheme period — 28 September 2020 to Sunday 28 March 2021 — is referred to as the ‘extended scheme’;
• a reference to an employee or a worker (who is eligible for JobKeeper) includes a reference to a business participant and a religious practitioner (who is eligible for JobKeeper);
• a reference to a business or an employer (which is eligible for JobKeeper) includes a reference to a not-for-profit entity and a religious institution (which is eligible for JobKeeper);
• a reference to the 30 per cent decline in turnover test (for most businesses) includes a reference to the 50 per cent decline in turnover test (for businesses with annual turnover exceeding $1 billion) and the 15 per cent decline in turnover test (for not-for-profit entities).

The proposed changes to the JobKeeper scheme

The proposed amendments to the operation of the JobKeeper scheme are outlined below. Other features of the current scheme will remain the same for the extended scheme.

Eligible employees

Current scheme

An individual is an eligible employee of their employer for a fortnight where they satisfy the following requirements:

• the individual is employed by the entity at any time in the fortnight — including those stood down or re-hired;
• on 1 March 2020 — the individual was aged 18 or over (or if they were 16 or 17 years old on 1 March 2020 — they were independent or not undertaking full-time study);
• on 1 March 2020 — the individual was either a full-time, part-time or fixed-term permanent employee, or a long-term casual employee;
• on 1 March 2020 — the individual was either an Australian resident for social security law purposes, or a tax resident and held a special category Subclass 444 visa;
• the individual agrees to be nominated by the employer as an eligible employee; and
• the individual does not receive the Government’s paid parental leave or dad and partner pay, or workers’ compensation payments for total incapacity for work, at any time during the fortnight.

Similar eligibility requirements exist for business participants, relevantly including that, on 1 March 2020, the individual was:

• a business participant in relation to the business; and
• actively engaged in the business.

Eligiblity from 3 August 2020

The eligibility criteria for employees (and business participants) will change from Monday 3 August 2020. For the final four fortnights of the current scheme, and throughout the extended scheme, the reference date for employee eligibility for the extension periods will generally change from 1 March 2020 to 1 July 2020.

The revised eligibility criteria are as follows:

• the individual is employed by the entity at any time in the fortnight — including those stood down or re-hired;
• on 1 July 2020 — the individual was aged 18 or over (or if they were if 16 or 17 years old on 1 March 2020 — they were independent or not undertaking full-time study);
• on 1 July 2020 — the individual was either a full-time, part-time or fixed-term permanent employee, or a long-term casual employee;
• on 1 July 2020 — the individual was either an Australian resident for social security law purposes, or a tax resident and held a special category Subclass 444 visa (note that the Fact Sheet states 1 March 2020 — however, another updated Treasury fact sheet confirms that the test date is 1 July 2020; presumably the 1 March 2020 reference is an error);
• the individual agrees to be nominated by the employer as an eligible employee; and
• the individual does not receive the Government’s paid parental leave or dad and partner pay, or workers’ compensation payments for total incapacity for work, at any time during the fortnight.

Payment rates

Current scheme

The payment rate — i.e. the minimum amount which an eligible employer must pay an eligible employee, and the amount which the ATO pays the employer per eligible employee — is $1,500 per fortnight. This is a flat rate regardless of the employee’s work hours for the relevant fortnight.

Extended scheme

The payment rate will be reduced in two tranches as follows:

The eligibility criteria for the full rate and the partial rate are explained below.

Note
Businesses will be required to nominate which payment rate they are claiming.

Categories of employees —  hours worked during reference period

Current scheme

There is no distinction between full-time, part-time, fixed term, casual or stood down employees for the purposes of the minimum payment. Every eligible employee is entitled to the minimum payment of $1,500 per fortnight regardless of the number of hours worked in a fortnight.

An employee must have been employed (other than as a casual, excluding a long-term casual) by the business on 1 March 2020.

A business participant must have been actively engaged in the business on 1 March 2020.

Extended scheme

The two-tier payment system will apply to workers based on their average weekly work hours in the relevant reference period.

The reference period is the four weeks of pay periods before either 1 March 2020 or 1 July 2020.

Workers with 1 March 2020 eligibility are able to use the period with the higher number of hours worked.

The payment tiers will apply as follows:

Implications
Under the current scheme, the requirement for an employee to have been employed on 1 March 2020 and for a business participant to have been actively engaged in the business on 1 March 2020 does not include a minimum number of hours of the employment or active engagement.

Employees whose work hours decreased from at least 20 hours per week (average) to less than 20 hours per week after February/June 2020 due to the COVID-19 crisis — including those who were stood down — will still remain entitled to the full payment rate regardless of the hours they actual work in a fortnight from 28 September 2020.

Business participants who, before March/July 2020, worked in their business for less than 20 hours per week (average) but have since increased their active participation due to the crisis will not qualify for the full payment rate regardless of how many hours they work in their business from 28 September 2020.

Business participants — hours of active engagement

The original version of the Fact Sheet released on 21 July 2020 indicated that the payment rate for business participants would be determined based on whether the business participant was actively engaged in the business for less than 20 hours, or for 20 hours or more, on average in the month of February 2020.

The revised version of the Fact Sheet removes the reference to the calendar month of February 2020 (nor does it refer to the calendar month of June 2020). Accordingly it would appear that the test period for business participants has been changed to align with the test period for employees, i.e. the four weeks of pay periods prior to 1 March or 1 July 2020. The question arises as to how the hours of active engagement will be tested if the business does not have any employees, i.e. there are no ‘pay periods’.

Eligibility criterion — decline in turnover test

Current scheme

The decline in turnover test operates by comparing the business’:

The turnover test period may be:

• a calendar month from March 2020 to September 2020 (inclusive); or
• the June 2020 or September 2020 quarter.

The relevant comparison period is the corresponding month or quarter in 2019.

The business’s turnover must have decreased by the requisite percentage — i.e. 15, 30 or 50 per cent — between the comparison period and the turnover test period.

The Commissioner has exercised his discretion to establish an alternative decline in turnover tests where there is not an appropriate relevant comparison period.

Extended scheme

The proposed new decline in turnover test will operate as follows:

Implications
From 28 September 2020, businesses will no longer be able to test for eligibility using projected (i.e. estimated) GST turnover or to choose a calendar month as a test period.

Assessing decline in turnover based on activity statements

Businesses will generally be able to assess eligibility based on details reported in their Business Activity Statement (BAS).

The deadline to lodge the September BAS is in late October, and the December BAS is in late January (monthly) or late February (quarterly). Therefore businesses will need to assess their JobKeeper eligibility in advance of the BAS deadline in order to meet the wage condition.

The Commissioner’s discretion

There are a number of matters in relation to which the Commissioner will have discretion in relation to the ATO’s administration of the extended scheme:

• The Commissioner will have the discretion to set out alternative tests where a worker’s hours were not usual during the February 2020 and June 2020 reference periods — e.g. where the employee was on leave, volunteering in the bushfire effort, or not employed for the whole period.
• The ATO will provide guidance where the employee was paid in non-weekly or non-fortnightly pay periods and in other circumstances.
• The Commissioner will have the discretion to set out alternative tests in circumstances where it is not appropriate to compare actual GST turnover in a quarter in 2020 with actual GST turnover in the comparative quarter in 2019.
• The Commissioner will have discretion to extend the time for meeting the wage condition so that businesses have time to first confirm their JobKeeper eligibility.

At time of writing the ATO has not released any guidance on how it will administer the proposed extended scheme.

Case study — extended scheme

This example has been extracted from the Fact Sheet.

Retesting turnover

Carmen owns and runs the City Café. Carmen started claiming the JobKeeper Payment for her eligible staff and herself as a business participant when the JobKeeper Payment commenced on 30 March 2020. At the time, Carmen estimated that the projected GST turnover for City Café in April 2020 would be 70 per cent below its actual GST turnover in April 2019. To be eligible for the JobKeeper Payment from 30 March 2020 to 27 September 2020, Carmen needed to show the turnover for the City Café was estimated to decline by at least 30 per cent.

As a monthly BAS lodger, Carmen submitted her BAS for the City Café in July, August and September. For each of these, her actual turnover was as follows:

The actual turnover decline for the September 2020 quarter is greater than 30 per cent, so City Café is eligible for the JobKeeper Payment for the period of 28 September 2020 to 3 January 2021.

Business continued to improve for the City Café, and actual turnover for the December 2020 quarter was 20 per cent less than the December quarter 2019, so the City Café was no longer eligible to claim the JobKeeper for the second extension period starting from 4 January 2021.

Working out the payment rate

Carmen also needs to calculate how much to claim for each of her staff, and for herself as a business participant.

Carmen — business participant

As Carmen was working full-time at the café herself throughout February 2020, she is entitled to claim $1,200 per fortnight from 28 September 2020 to 3 January 2021, as an eligible business participant.

She has three full-time employees who are also eligible to be paid $1,200 per fortnight because they each worked 20 hours or more per week throughout February 2020.

Chris — part-time

Carmen has an employee, Chris, who works part-time with different hours every other week: 14 hours one week; and 22 hours the next week. During the two pay fortnights (i.e. the four weeks of pay periods) prior to 1 March 2020, Chris was employed for 36 hours in each fortnight. On average, Chris worked less than 20 hours per week for City Café. Carmen is eligible to claim $750 per fortnight for Chris, from 28 September 2020 to 3 January 2021.

Cathy — long-term casual — less than 20 hours per week

Cathy is an eligible employee who worked on a long-term casual basis during February 2020 and June 2020. To determine what rate of JobKeeper Payment to claim for Cathy, Carmen looks at pay records for the two fortnightly pay periods before 1 March 2020 and 1 July 2020. She sees that Cathy was employed on average less than 20 hours per week, so Carmen claims $750 per fortnight for Cathy, from 28 September 2020 to 3 January 2021.

Charles — not employed in 1 March 2020

Carmen also started employing Charles, who works part-time, from June 2020 when business started picking up again. Because Charles was employed at City Café before 1 July 2020, Carmen looks at pay records for the two fortnightly pay periods before 1 July 2020 to determine the rate of JobKeeper Payment to claim for Charles. Charles was employed on average less than 20 hours per week for this period, so Carmen claims $750 per fortnight for Charles, from 28 September 2020 to 3 January 2021.

Webinar

Still have questions relating to JobKeeper 2.0? Check out our recent JobKeeper presentation that will cover key information to prepare yourself and your clients for the new changes.

This webinar — recorded on 31 July 2020 — addresses the changes proposed by the Government on 21 July 2020. However, it does not incorporate the further Government announcements of 7 August 2020.

Further information

For more on the latest legislation changes, join us for our monthly tax updates, hosted by some of Australia’s leading tax experts.

We facilitate these online and in locations across Australia (in line with current COVID-19 restrictions).

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JobKeeper overpayments

On 31 July 2020, the ATO released guidance in a fact sheet titled ‘JobKeeper overpayments’ (QC 63309) in relation to how it intends to administer overpayments of JobKeeper payments.

An entity has received an overpayment if it had incorrectly self-assessed that it was eligible for the JobKeeper Payment scheme when it was not, or alternatively, if it had self-assessed that a particular individual (employee, business participant or religious practitioner) was eligible when they were not.

If the ATO identifies an overpayment, the ATO will decide one of the following:

• that the overpayment does not have to be repaid;
• that the overpayment needs to be repaid by the entity; or
• that another entity (e.g. the individual) that directly or indirectly benefited from the overpayment is also liable to repay the overpayment. In these circumstances the ATO may pursue:
  • the entire repayment from the entity;
  • the entire repayment from the other entity; or
  • payments from both the entity and the other entity until the overpayment is repaid in full.

The legislative background

The Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (the Act) established the legislative framework, under which the Commissioner has general administration of the JobKeeper Payment scheme. Sections 9 to 11 of the Act set out the consequences of an overpayment and underlie the ATO’s compliance approach.

The ATO’s compliance approach

When won’t repayments be required?

Under the Act, the Commissioner has discretion to determine in writing that an entity is not liable to repay an overpaid amount.

The ATO acknowledges that businesses may have incorrectly self-assessed eligibility for JobKeeper in the early stages of the scheme due to the need to move quickly.

The ATO may decide that an overpayment does not have to be repaid — particularly if there was an honest mistake.

The ATO will make this decision on the facts and circumstances of each case. Relevant factors may include whether:

• the entity had relied in good faith on a statement made by an employee in their nomination notice;
• the entity fully passed on the benefit of the JobKeeper payment to the employee;
• the mistake was made earlier in the JobKeeper scheme when there was less public guidance.

Note:
An example of relying in good faith on a statement made by an employee in their nomination notice may include where:

• • the employee had falsely declared that they had not been nominated by another entity, when they had in fact been nominated by another entity; or
  • an employee who was 16 or 17 years of age on 1 March 2020 had falsely declared that they were ‘independent’ and/or was not a ‘full time student’ on that date.

However, where the employer and employee had colluded to falsify records about the employee’s employment status, this will not be an example of relying in good faith on a statement made by the employee.

What will the ATO consider to be an ‘honest mistake’?

The ATO states that it will consider a mistake to be honest if ‘it is reasonable to have made the mistake in your circumstance’.

A mistake will not be considered ‘honest’ if any of the following applies:

• fraud was perpetrated by either the JobKeeper recipient or another entity;
• there has been intentional disregard of the law, recklessness in its application;
• the entity nominated employees, business participants, or religious practitioners that it should have known would not satisfy eligibility requirements;
• the employer has deliberately not met the wage condition; or
• the entity has been contacted by the ATO about its claim potentially being ineligible and has not taken reasonable steps to check the eligibility before making subsequent claims.

This is not an exhaustive list and there may be other circumstances where a mistake is not considered honest.

When will repayments be required?

If the ATO identifies that an entity has received an overpayment of JobKeeper that needs to be repaid, it will write to the entity to inform:

• why there has been an overpayment;
• how much needs to be repaid; and
• how to make the repayment.

The entity may object to the ATO’s decision to require a repayment.

Reference
Generally, an entity may object to JobKeeper-related decisions under Part IVC. The ATO has not released any procedural instructions specific to JobKeeper decisions. Its forms and procedures that generally apply to other Part IVC objections are available on its webpage ‘How to object to a decision’.

Administrative penalties

Generally, the ATO will not impose administrative penalties for JobKeeper overpayments that were the result of a mistake.

However, administrative penalties will apply if there is evidence of deliberate actions to access JobKeeper payments that the entity would not have otherwise been entitled to.

General interest charge (GIC)

Under the Act, the repayment is due on the same day that the Commissioner makes the overpayment. GIC accrues on the amount that remains unpaid after its due date, until the amount is paid. The Commissioner’s powers to remit GIC in certain circumstances will apply.

Joint and several liability

Under the Act, where the overpayment occurred:

• because the entity reasonably relied on a statement that was made by another entity, where the statement was false or misleading in a material way; or
• due to the fraud of another entity,

the entity and the other entity will be jointly and severally liable to repay the overpayment and the GIC.

Joint and several liability will only arise where the Commissioner is satisfied that the necessary circumstances exist, and that it is reasonable for the two entities to be jointly and severally liable.

Examples

The ATO has provided the following examples of when it may or may not require a repayment in its fact sheet.

Example 1 — New to business sole trader that does not meet integrity rules

Jack started a new business selling toys at the start of December 2019. He completed the necessary registrations for his new business as a sole trader, including getting an ABN and registering for quarterly GST reporting. Jack also paid other costs in establishing his business. Due to delays in setting up the business, he didn’t make any sales until late January 2020.

As Jack’s business didn’t make any taxable supplies in the December quarter reporting period, the business is not eligible for JobKeeper. This is because it did not make a taxable supply in the tax period that ended before 12 March 2020.

Jack made relevant inquiries, including discussing his potential application with his tax agent, to determine eligibility before he applied for JobKeeper as a business participant. He received a JobKeeper payment in respect of fortnights 1 and 2. Before payments for fortnights 3 and 4, he received notice from the ATO that he was ineligible under the integrity rules.

While this is considered an overpayment, Jack will not have to repay the JobKeeper payments made to him for fortnights 1 and 2. Even though Jack didn’t satisfy the integrity rules, for fortnights 1 and 2, he satisfied all other eligibility requirements. It’s reasonable for Jack not to know that he didn’t satisfy the integrity rules when he claimed for fortnights 1 and 2 and it is considered that Jack made an honest mistake.

Example 2 — Employer makes honest mistake regarding employee’s eligibility

Jo is an Australian tax resident, has one job and is on a partner visa which makes her ineligible for JobKeeper payments. Jo is still working and earning $2,800 per fortnight from MedCo, a company with many employees. After registering for JobKeeper, MedCo gives each of its employees, including Jo an employee nomination notice.

Jo returns it to them on 1 May 2020. Jo continues to receive her salary of $2,800 gross from MedCo, who are then reimbursed $1,500 for JobKeeper fortnights 1 to 4 for wages paid to Jo. The ATO identifies the mistake and bring it to MedCo’s attention after the payment for fortnights 3 and 4.

As MedCo relied on Jo’s nomination notice, it will have made an honest mistake in claiming JobKeeper for Jo. The ATO will not require repayment of the overpayment in respect of fortnights 1 to 4.

MedCo will not receive any future JobKeeper payments for Jo.

Even if the error was identified after fortnight 4, unless there were other factors weighing against the exercise of the discretion, the ATO would not pursue recovery from MedCo This is because MedCo reasonably relied on Jo’s employee nomination notice and made an honest mistake about whether her visa made her ineligible to receive JobKeeper.

Example 3 — Employer makes honest mistake regarding employee’s eligibility

Big Business Co (BB Co) has an aggregated turnover well in excess of $1 billion. It had a projected decline in turnover of 35 per cent at the test time, and incorrectly applied the 50 per cent decline in turnover test instead of the 30 per cent test as required in the turnover rules.

BB Co has applied for JobKeeper on behalf of 1,000 employees and has received payments for JobKeeper fortnights 1 and 2. BB Co met the wage condition for all 1,000 employees of paying a minimum of $1,500 per fortnight (before tax).

As BB Co did not satisfy the 50 per cent decline in turnover test, it was ineligible for JobKeeper and is liable for the overpayments.

The ATO will not waive the requirement to repay these JobKeeper overpayments as BB Co did not make an honest mistake; its mistake was not reasonable in all the circumstances. BB Co was reckless in not thoroughly considering the decline in turnover test provisions and the substantial support material published by the ATO outlining eligibility requirements.

Example 4 — Information within the knowledge or control of the employer

Tony began employment with XYZ Pty Ltd after 1 March 2020, making him ineligible for JobKeeper payments. Tony is still working and earning $2,800 per fortnight. XYZ Pty Ltd gives Tony a nomination notice as they have given them to all staff despite him not meeting employee eligibility requirements.

Tony returns the nomination notice to XYZ Pty Ltd on 1 May 2020. Tony receives a $2,800 gross from XYZ Pty Ltd and the employer receives $1,500 for Tony.

The ATO will not waive the requirement to repay as information pertaining to Tony’s ineligibility was within the knowledge or control of XYZ Pty Ltd.

It was not reasonable for XYZ Pty Ltd to not know that Tony was not an eligible employee as they held information about his employment status as at 1 March 2020.

COVID-19 data matching program

The ATO has implemented a data matching program in respect of the Government’s COVID-19 economic response support payments — including JobKeeper Payments — for the 2019–20 and 2020–21 income years. The ATO will obtain Services Australia and state and territory correctional facility data to identify risks such as identity theft, or incorrect or misleading information included in applications to falsely obtain JobKeeper payments.

More generally, the ATO’s access to Single Touch Payroll data may assist in revealing situations where an employee is ineligible.

Further information

For more on the latest legislation changes, join us for our monthly tax updates, hosted by some of Australia’s leading tax experts.

We facilitate these online and in locations across Australia (in line with current COVID-19 restrictions).