JobKeeper 2.0 effectively begins next week, so it is time to consider your eligibility.

UPDATED 13 October 2020…

The first iteration of JobKeeper effectively comes to an end this weekend (Sunday being the last day of the last JobKeeper 1.0 pay period).

So for those who have previously qualified there is just one more guaranteed payment to be received from the Federal Government in October.

Now, all businesses including those who qualified for JobKeeper 1.0 and those who didn’t must reassess their eligibility for version 2, and if applicable take action without delay.

Assessing Decline in Turnover for JobKeeper 2.0 – No ESTIMATING!!!

Probably most important to know is that JobKeeper 2.0 contains effectively no scope for ‘estimating’ a decline in turnover.

Which means for virtually all CapitalQ Community Members actual turnover for the 2020 September quarter must be at least 30% less than it was for the 2019 September quarter for your business to be eligible for the first stage of JobKeeper 2.0.

This means that you can not make your assessment for whether you qualify for JobKeeper 2.0 until you have completed your accounting for the September quarter (ie. on or after 1 October).  But you will ideally want to make sure you have done so by no later than 11 October (being the first payment fortnight)!

If you don’t qualify based on the September quarter turnover test, you will miss out for the first stage.  Though you get a chance to reapply in January if your turnover in the December quarter declines relative to last year.

How to Measure Turnover – Some Uncertainty Continues (Updated 13 October 2020)

Now here is the most frustrating part, even after several months of opportunity to have the issues clarified, when we first wrote this Blog post unfortunately we still didn’t have clear cut guidance from Treasury nor the ATO as to how best to measure turnover for JobKeeper 2.0.

We had attended information sessions and technical briefs, we had spoken to specialist tax advisers and the ATO on multiple occasions, and the answers either remained ‘we don’t know for sure’ or when someone was prepared to stick their neck out, their answer usually contradicted the advice of the last person to be so brave.

The ATO website clearly states that you measure turnover based on that reported on your Activity Statement.  And the ATO Portal actually now performs the comparison between last year and this year and advises if you qualify for JobKeeper 2.0.

However, we have been advised by multiple sources at the ATO that if you lodge your Activity Statement on a “cash” basis, you may also apply the test on an “accrual” basis (ie. based on the value of invoices issued during the period, not on the value of cash received during the period).

For us, being able to apply the test this way makes perfect sense, and is a much better assessment of how a business is performing in the current environment.

However, despite this advice from the ATO by phone, none of the formal material available seems to allow for this method.

Therefore we will continue to monitor the situation over the course of the month of October.

Regardless of whether options exist for using a cash or accruals basis, there are still a number of complex, and continually evolving, rules around how to measure where special circumstances might apply, or where there have been one off transactions (ie. a sale of a large piece of equipment).  So for now, with some five days to go in the quarter, our advice is this…

  • You will likely already have a good intuition as to whether your business is performing, revenue wise, worse than last year, so in the first instance go with your gut,
  • If that is the case, look at your Profit & Loss Statement (having ensured all record keeping and data entry is up to date, don’t make the mistake of looking at your reports when the bank account isn’t reconciled and the latest invoices have not been entered or issued) and see if this indicates a decline of at least, or close to, 30%,
  • Also look at your Activity Statement(s) for the September quarter last year and compare it to the September quarter this year, to see if this also indicates a decline of at least, or close to, 30%,
  • If you feel confident your business has suffered at decline of at least 30%, let us know and we will work with you to firm up your position and ensure you have all the required evidence in the event of an ATO review,
  • If you have suffered a decline, but aren’t at 30%, we recommend caution.  We know, and the ATO know perfectly well, many business owners will be tempted to manipulate their figures, including delaying the sending of any further invoices this month, in order to qualify.  We of course can not recommend such a strategy, and we encourage all CapitalQ Community Members to be very careful in this regard.  Yes we understand there will be many who do this, and some who will get away with it.  But there will be many who won’t get away with it and we don’t want to see any of you in this category,
  • In this case please reach out and talk to our Team and we will see what can be done to qualify (legitimately).

Your Business Has Declined at least 30% from Last Year, Now What?

Well, chances are you are already receiving JobKeeper 1.0.  If that is the case, lodge your final JobKeeper 1.0 declaration by 14 October as usual.  Then…

  • For business’ both already on JobKeeper, and those qualifying for the first time, ensure you have completed nomination forms for all eligible employees,
  • Next, ensure you are making the minimum payments to ALL your eligible employees each fortnight as below (though for October, if you miss the first fortnight, you are allowed to catch up so long as you do so by 31 October).  Continue to make the minimum payments to eligible employees each fortnight throughout November and December.
  • Before 31 October submit your actual decline in turnover for the September quarter to the ATO, proving your eligibility for JobKeeper 2.0.
  • Between 1 and 14 November, lodge your first JobKeeper 2.0 Declaration and repeat in each of December and January.
  • Come 1 January, reassess your turnover and eligibility for the coming quarter.

New Minimum Payments to Eligible Employees

The minimum payments required to be made to eligible employees has changed for JobKeeper 2.0.

The rate of the JobKeeper payment will depend on the number of hours an eligible employee works, or an eligible business participant is actively engaged in the business.

  • Tier 1 – This applies to eligible employees who worked for 80 hours or more in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, and for eligible business participants who were actively engaged in the business for 80 hours or more in February and provide a declaration to that effect.
  • Tier 2 – This applies to any other eligible employees and eligible business participants.

The respective rates are as follows –

  • December 2020 Quarter: Tier 1 – $1,200 per fortnight, Tier 2 – $750 per fortnight
  • March 2021 Quarter: Tier 1 – $1,000 per fortnight, Tier 2 – $$650 per fortnight

Don’t Miss Out Unnecessarily

We know the rules around JobKeeper can be confusing and can cause anxiety.  And we know some business owners have either felt it is all too hard or that they just don’t want to risk getting it wrong.

But we would strongly encourage that if your business is still, or has begun, to see a decline relative to last year, regardless of the cause, do please reach out to us and we will do all we can to ensure you receive any and all entitlements you are eligible for while making sure the stress and risk are kept to an absolute minimum.

On that note…

Audit Insurance Covers JobKeeper Reviews

Most CapitalQ Community Members will have this week received an offer from us for Audit Insurance for the coming 12 month period.

The potential good news is that we can confirm the policy does include audits related to JobKeeper (where you have been accepted as eligible, and then the ATO subsequently review your eligibility, it of course does not cover costs associated with the initial application process).

So perhaps this is a further consideration and possible argument to take out cover this year when you may ordinarily decide not to.