In light of the continuing COVID-19 crisis, the government announced in July it will extend the JobKeeper program beyond September. However, the worsening economic conditions in Victoria due to the stage 4 restrictions prompted further changes announced in early August. This article discusses the latest changes to the JobKeeper program.
This month, my column focuses on the latest changes to the JobKeeper program. The original program, JobKeeper 1.0, commenced on 30 March 2020 to support businesses through the economic crisis caused by the COVID-19 pandemic.
The JobKeeper program was designed to be adaptable and scalable so that it could be adjusted to respond to changing and unpredictable economic conditions. The JobKeeper legislation provides the Treasurer with broad powers to make rules by way of legislative instruments outside parliamentary sittings. Any tweaks or adjustments should be regarded as the government remaining nimble.
Following a three-month review of JobKeeper which concluded that the case for extending JobKeeper beyond September was strong, the government announced on 21 July 2020 that a modified program (JobKeeper 2.0) will continue for another six months beyond its legislated end date of 27 September 2020 until 28 March 2021.
Just two weeks later, on 7 August 2020, in response to the worsening economic conditions in Victoria due to the stage 4 restrictions, the government announced further changes to the JobKeeper program (JobKeeper 2.1). This announcement also contained some tweaks to the eligibility conditions for employees from 3 August (JobKeeper 1.1).
The JobKeeper 2.0 changes are explained in more detail in this article and are summarised in this handy infographic. The JobKeeper 2.1 changes are further explained in this article and are summarised in this handy infographic.
Changes announced on 21 July 2020
Under the changes announced on 21 July:
Change announced on 7 August 2020
However, a further change announced on 7 August will see the relevant date of employment move from 1 March 2020 to 1 July 2020, which will allow more employees to be eligible for JobKeeper. The partial rate will apply to eligible employees who were working in the business for less than 20 hours per week on average in the four weeks of pay periods before either 1 March or 1 July 2020.
The partial rate will apply to eligible business participants who were “actively engaged” in the business for less than 20 hours per week on average.
Businesses and not-for-profits will need to nominate which payment rate they are claiming for each individual.
Issues relating to the wage condition and eligibility of individuals
Even with the two rounds of changes, the modified JobKeeper rules are not perfectly clear. The following key issues have emerged in relation to the wage condition and the eligibility of employees and business participants:
Changes announced on 21 July 2020
The current JobKeeper rules require businesses to satisfy the decline in turnover test only once for a single month or quarter between March and September 2020. The changes announced on 21 July proposed that to be eligible for JobKeeper, businesses would instead need to demonstrate that their actual GST turnover has declined by the requisite percentage:
This design did not have regard for those businesses whose situations may have improved slightly in the June 2020 quarter but have deteriorated in the September or December quarters, such as those in Victoria that are subject to the stage 4 restrictions.
Change announced on 7 August 2020
Under the JobKeeper 2.1 changes announced on 7 August, to be eligible for JobKeeper, businesses will need to demonstrate that their actual GST turnover has declined by the requisite percentage:
This sensible modification will allow those businesses that had not suffered the requisite decline in their turnover in the June 2020 quarter, but have since suffered a significant deterioration in their turnover, to now qualify for JobKeeper. Obviously, many Victorian businesses are most likely to be in this position.
Any business that satisfied the test for the June quarter but not the September or December quarters is ineligible for JobKeeper after 27 September 2020. This is an appropriate outcome as JobKeeper 2.1 is designed to support those businesses that are continuing to suffer a decline in their turnover, or suffer the requisite decline for the first time in the September or December quarters.
Issues relating to the decline in turnover test
Once again, the modified rules are not perfectly clear. The following key issues have emerged in relation to the decline in turnover test:
The announcements by the government on 21 July 2020 and 7 August 2020 need to be reflected in legislative amendments. The current JobKeeper legislation prevents payments being made by the government beyond 31 December 2020, so an amending bill before a sitting of Parliament will be necessary. A legislative instrument issued by the Treasurer will set out the details of the new rules. Further details will be available once the legislative amendments are released and updated ATO guidance is published.
Robyn Jacobson, senior advocate, The Tax Institute
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