JobKeeper payments extended until March 2021
- Published: July 23, 2020
- Author: Asparq
JobKeeper 2.0 – An extension of the JobKeeper payments by a further 6 months until March 2021.
The JobKeeper payment was introduced by the Federal Government to help businesses pay their employees due to the ongoing COVID-19 crisis. The scheme was initially scheduled to expire on September 27, 2020, which left many of us thinking what comes next for impacted businesses still struggling.
On Tuesday 21 July, the Federal Government announced that the JobKeeper scheme will be extended by a further 6 months, until 28 March 2021. With this comes reducing payment rates and employees being paid different amounts based on hours worked. There will also be changes to eligibility criteria, with businesses needing to qualify for the payments each quarter based on actual decline in turnover.
Payment Rate Changes from 28 September 2020
The hours for the tiered system will be based on average hours worked in the month of February 2020 rather than the month the payment relates to
Eligibility Changes from 28 September
The decline in turnover will be retested on a quarterly basis – based on actual GST turnover
According to the treasury of Australia, “businesses and not for profits will need to demonstrate that they suffered an ongoing significant decline in turnover using their actual GST turnover – rather than projected.”
Eligibility will be assessed based on June and September quarters. Applicants will need to demonstrate that they have met this decline in turnover test for each of the June and September quarters to remain eligible.
So, for example, if you are applying on September 28, your eligibility will be based on actual turnover decline during the June quarter. You will then reapply using your decline in turnover figures for the September quarter.
Decline in turnover requirement for the additional 6-month JobKeeper period of September 2020 – March 2021 as published by the Federal Government on 21 July 2020 – (note: these new rates don’t take affect until September 28 so no action is required just yet!):
- 50 per cent for those with an aggregated turnover of more than $1 billion.
- 30 per cent for those with an aggregated turnover of $1 billion or less; or
- 15 per cent for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities).
Criteria for who counts as an eligible employee will not change.
Our Senior Associate Accountant, Igor Mateski’s Comments
While JobKeeper 2.0 will be a welcome lifeline for many businesses who are struggling, business owners should still review their financial position and consider what the business will look like financially at the end of March 2021.
JobKeeper will cover their wage costs, but business owners need to consider whether they are accumulating other debts that will need to be paid and then how and when they will need to pay those. For example, landlords may have given deferrals on paying rent rather than rent waivers – when that deferral agreement ends will the business be able to afford to pay the deferred rent as well as all the usual expenses?
A business may have regular fixed costs that need to be paid apart from wages, in which case the business needs to work out if they are making enough to cover those costs and if not how long they can do that before it becomes too much.
Small business owners are often emotionally tied to their business, so they may try to hang on even when financially it would not make sense. The best thing they can do is consider their current financial position and do some “what if” scenarios. For some hanging on due to the support of JobKeeper may mean, unfortunately, that they would be in a worse position financially than if they simply closed the business.
Those who are not sure where or how to start, should reach out to their trusted advisers for help.
The information contained herein is of a general nature only and is not intended to be relied upon nor is it a substitute for appropriate professional advice. Whilst all care has been taken in the preparation of the material, it is not guaranteed to be accurate. Individual circumstances are different and as such require specific examination. Asparq cannot accept liability for any loss or damage of any kind arising out of the use of or reliance upon all or any part of this material. Additional information may be made available upon request.
Need Assistance?Contact Asparq Today
- July 29, 2020
- by James Baren >
Information For Businesses
Are you considering home renovations? Make sure you protect your existing home
- July 13, 2020
- by JobKeeper payments extended until March 2021 >
Information For Businesses
Latest Victorian Government Support Packages For Businesses