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What the government changes to JobKeeper mean for business owners

The government has released more detail about the much-anticipated changes to the JobKeeper program. In a press conference, the Prime Minister, the Hon Scott Morrison and the Treasurer, the Hon Josh Frydenberg announced a new and more targeted version of the JobKeeper program will commence from October 2020.

The changes will take effect from 28 September and will be implemented progressively so employers currently receiving the wage subsidy will continue to receive JobKeeper in its current form until the end of September.

The revamped JobKeeper program, labelled JobKeeper 2.0, will see some fundamental changes to the program, particularly around eligibility testing and the rate of pay required to be paid to eligible employees. Under the current JobKeeper program, eligible employers were required to satisfy the decline in turnover test once, with the test period limited to either a selected month or relevant quarter. While eligible employers were required to provide monthly data to the ATO of current and projected turnover, eligibility for the program did not cease if turnover returned to normal or increased.

Under JobKeeper 2.0, eligible employers will need to re-test the decline in turnover in October and December to ensure ongoing eligibility. The PM has indicated the new JobKeeper eligibility tests will be based on a comparison of quarterly turnover and will not be limited to a one-off test. To be eligible for ongoing JobKeeper assistance, businesses will need to pass the relevant decline in turnover rates as follows:

Eligibility period
Decline in turnover test period
October – December 2020 April – June 2020
July – September 2020
The relevant decline in turnover test must be satisfied in BOTH quarters.
January – March 2021 April – June 2020
July – September 2020
October – December 2020
The relevant decline in turnover test must be satisfied in ALL three quarters.

Testing of ongoing eligibility based on ongoing quarterly turnover will assist in ensuring integrity in the program and ensuring the program is targeted at those businesses impacted most by COVID-19.  This is a welcome change that will help limit the financial burden on the government and Australian taxpayers, but also ensures business owners impacted by COVID-19 are provided with the support to continue to operate and engage their employees until COVID-19 outbreaks are contained and restrictions released.

While the detail of the new eligibility tests is yet to be announced, on the face of it, it appears the proposed changes will assist in ensuring financial support is targeted to industries most impacted by the ongoing effects of COVID-19 restrictions such as hospitality, tourism, entertainment and the airline industry. The proposed changes will also ensure financial support is directed to businesses in Victoria and New South Wales which have been impacted by an increase in COVID-19 cases and a second round of restrictions.

Related: JobKeeper: The winners and the losers

The PM also announced changes to the JobKeeper minimum wage condition which will see employees receive support based on their basis of employment as opposed to receiving a flat rate of support. The government has announced JobKeeper 2.0 will have a two-tiered approach to the minimum JobKeeper wage: one for full time employees; the other for part-time and long-term casual employees. The new rates will be as follows:

Employee working >20 hrs per week*
Employee working <20 hrs per week*
28 September 2020 – 3 January 2021 $1,200 pf (before tax) $750 pf (before tax)
4 January 2021 – 28 March 2021 $1,000 pf (before tax) $650 pf (before tax)

* The 20-hour work test refers to the month of February 2020 (with some Commissioner discretion).

This change is welcome as it will address the anomaly where casual or part-time employees were paid a flat rate of $1,500 per fortnight (before tax) irrespective of their usual rate of pay or working hours, or where stood-down employees receiving JobKeeper support from their primary employer have obtained temporary employment with another employer.

The gradual weaning off of government support will give businesses the opportunity to revisit future sustainability. RSM strongly advises business owners to engage with their advisers to create a plan for the future, whether that be business growth, business reinvention or business cessation.

The Minister for Finance, Mathias Corman, had indicated in an earlier press conference that the government was cognisant of the issue where stimulus support packages, such as JobKeeper, were keeping otherwise-insolvent companies afloat and this was not the intent of the program. The proposed changes may be a warning for zombie companies. Given the impending changes and ultimate cessation of the program in early 2021, otherwise-insolvent companies may need to consider whether they continue to reassess eligibility or seek advice relating to voluntary administration or winding up while ASIC concessions surrounding insolvent trading provisions are still in effect.

Further detail regarding the changes is not expected until government resumes in September; however, the government announcement appears reasonable and equitable, and will ensure support is more targeted towards those who most require it.

Tracey Dunn is Associate Director at RSM Australia.

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Loren Webb

Loren Webb

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