JobKeeper extends through wet season

LOCAL PROFESSIONAL ADVICE

Mitch Williams

Financial Writer

Email Mitch
Like
77%
Dislike
23%
Last updated:


In a welcome relief for the local community, Prime Minister Scott Morrison has today announced an extension to the JobKeeper program.

This will provide support to businesses who are still experiencing a significant decline in turnover to the prior year and avoid these businesses ‘falling off a cliff’ come the end of the September.

The economic outlook for many businesses in our local economy was quite dire post the end of September and heading into wet season. The likelihood of the many impacted businesses surviving a wet season with no cash reserves from the busy season and no government support was very low.

However, JobKeeper 2.0 will be a massive boost for business confidence as the wage support program will now run through to 28 March 2021 for those businesses who continue to suffer a significant decline in turnover to the prior year. I have no doubt that having this support through to Easter 2021 will mean the survival of many businesses in our region.

Under the existing JobKeeper program, businesses only had to have a decline in turnover of 30% once during the six months ending 27 September 2021 to remain in the program. Under the six months of JobKeeper 2.0, businesses will have to reconfirm their decline in turnover on two occasions to receive support through until 28 March 2021.

The following tests will be applied:

Jobkeeper Extension Period – 1

In order to be eligible for the first JobKeeper Payment extension period of 28 September 2020 to 3 January 2021, businesses will need to demonstrate that their actual GST turnover has declined by 30% in both the June quarter 2020 (April, May and June) and the September quarter 2020 (July, August, September) relative to the same quarters in the prior year.

Jobkeeper Extension Period – 2

In order to be eligible for the second JobKeeper Payment extension period of 4 January 2021 to 28 March 2021, businesses will need to demonstrate that their actual GST turnover has declined by 30% in the June, September and December 2020 quarters relative to the same quarters in the prior year.

The payment rate of JobKeeper has been reduced during the two extension periods and has also been split into two separates rates.

The ATO have introduced the two separate rates to minimise a key flaw from the original program where the government was essentially handing out a pay rise for many part time or casuals who were earning well below the JobKeeper rate prior to the pandemic.

Businesses will need to determine for each of their employees included in the JobKeeper program whether they qualify to be reimbursed for the full rate of JobKeeper or the reduced rate which is determined on the following basis:

Full Rate – In the four weeks of pay periods before 1 March 2020, the employee was working on average more than 20 hours per week. 

Reduced Rate – All other employees who don’t qualify for the full rate.

The same test above applies for Eligible Business Participants being all those who are self-employed. This includes sole traders, partners in a partnership, beneficiaries of a trust, directors of a company.

The full rate and reduced rate are different during both extension periods as broken down below:

Jobkeeper Extension Period – 1

Full Rate - $1,200 per fortnight
Reduced Rate - $750 per fortnight

Jobkeeper Extension Period – 2

Full Rate - $1,000 per fortnight
Reduced Rate - $650 per fortnight

The JobKeeper Payment will continue to be made by the ATO to employers in arrears.

Employers will continue to be required to make payments to employees equal to, or greater than, the amount of the JobKeeper Payment (before tax), based on the payment rate that applies to each employee.

--------

Mitch Williams is a Principal at SiDCOR Port Douglas and Mossman.



Submit a letter to the editor here.

* Readers are encouraged to use their full details to ensure letter legitimacy.


Send news tips and videos here


* Comments are the opinions of readers and do not represent the views of Newsport, its staff or affiliates. Reader comments on Newsport are moderated before publication to promote valuable, civil, and healthy community debate. Visit our comment guidelines if your comment has not been approved for publication.