The ATO has recently published a number of fact sheets in relation to Single Touch Payroll (STP) changes which will take effect on 1 July 2021. Small employers will commence to report for closely held payees, and the quarterly exemption for micro employers...
JobKeeper employee eligibility date changed to 1 July 2020
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.
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)
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.
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.
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.
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.
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.
The JobKeeper payment scheme – your questions, answered
TaxBanter is offering a tailored 1 hour online training session in which our expert trainers will guide your firm through the practical application of the JobKeeper package to your clients’ businesses.
Who is this session designed for?
Existing TaxBanter clients:
Coverage of the JobKeeper package will take place in your next scheduled training session. If you require training sooner, please contact us immediately to schedule an additional JobKeeper session ($770 per firm).
For other firms wishing to arrange a JobKeeper session, please contact us via email or phone us at 03 9660 3500 ($990 per non-client firm).
All sessions will be supported by comprehensive JobKeeper training material.