As many expected, this week Prime Minister Scott Morrison announced that the JobKeeper wage subsidy will be extended to help small businesses struggling through these crazy times.
On Tuesday initial details of JobKeeper 2.0 were announced. A sigh of relief could be heard across the small business sector. Much media cometary of late has focused on an economy in recession and the economic cliff we were heading for come to the end of September when JobKeeper 1.0 finishes.
As Business Advisors, we also started to turn our attention to business post September and talking to clients about what their business numbers will look like with the wage subsidy. There is further relief on the way for businesses struggling to recover.
Jobkeeper 2.0 is not legislation yet and further changes may be made between now and its start date at the end of September, however, this is what we know at this point in time.
- JobKeeper 2.0 will run to the fortnight ending 28th March 2021
- There will be 2 eligibility test periods to be able to access JobKeeper 2.0
- There is no change to decline percentages
- To be eligible from 28th September 2020 to 3rd January 2021;- Measure decline in turnover using actual GST Turnover in BOTH the June and September 2020 quarters to 3 January 2021, relative to comparable 2019 periods
- To be eligible from 4th January 2021 to 28th March 2021;- Measure decline using actual GST Turnover in EACH of the June, September, and December quarters of 2020, relative to comparable 2019 periods
- Jobkeeper remains open to new recipients provided they meet the existing eligibility requirements and the additional turnover tests during the extension period
- The Wage Subsidy remains at $1,500 per fortnight until 27th September 2020
- From 28th September to 2020 to 3rd January 2021 the wage subsidy will be $1,200 per fortnight for employees working up to 20 hours or more and $750 per fortnight for others
- From 4th January 2021 to 28th March 2021 the wage subsidy will be $1,000 per fortnight for employees working 20 hours or more and $650 per fortnight for others
- Jobkeeper 2.0 stops on 28th March 2021
- No changes to Jobkeeper eligibility for JobKeeper 1.0
- 20+ Work Hours Test (look back to February 2020)
From 28th September 2020, eligibility for ‘full rate’ (Tier 1) Jobkeeper depends on employee working in the 4 weeks of pay periods before 1st March 2020 for 20 hours or more on average.
The ATO has the discretion to apply an alternative test if am employee’s hours were not usual during the February 2020 reference period.
- Apprentices and Trainees in place 1st July 2020;- Wage subsidy of 50% of their apprentice or trainees wages paid until 31st March 2021
In addition to the existing support for small businesses, medium-sized businesses employing 199 people or fewer will now be eligible for the subsidy, for wages paid from 1st July 2020 to 31st March 2021.
SOLE TRADERS & ELIGIBLE BUSINESS PARTICIPANTS
- Jobkeeper eligibility continues for sole traders, a partner in a partnership, a beneficiary of a trust, a shareholder, or director of a company
- The 20+ Hour Test also applies to sole traders and eligible business participants from 28 September 2020, calculated by reference to time spent ‘actively engaged in the business’
If you have any questions or would like to discuss JobKeeper 2.0, please do not hesitate to contact our office.
Whilst Jobkeeper 2.0 is fantastic news for a business experiencing hard times, we encourage all small business owners to stay vigilant and keep the end in mind. These wage subsidies are fantastic but as a business owner, you must consider how your business is operating and what the cash flow position is without the subsidy. This may highlight changes required to ensure the business remains profitable post JobKeeper 2.0. Getting help early when there are cash flow issues is very important.
Our team is here to help!