Jobkeeper benefit have been a lifeline for many since the day it was announced by the Prime Minister. However, it was a quick design that came with a lot of mistakes and damaging effect on the economy. It all began with the registration form that allowed some employers to enter 1,500 employees mistakenly; even though they meant 1, in their minds.
When the payments started, some people received it without being eligible in fact, some employees received a sudden pay rise while some others were literally forced to live on a much smaller amount then they normally earn.
And everyone was thinking it will come to an end in September. But the government surprised us when they announced an extension on 21 July, until next March.
First news is all enrolled participants have certainty until the end of September based on the existing rules. The JobKeeper wage subsidy program has been extended until March 2021, albeit at lower rates and with additional eligibility testing for small businesses and sole traders.
The extension beyond September is also welcome by masses for two reasons:
Firstly, it provides ongoing support for industries that are still impacted either directly or indirectly by restrictions put in place to curb the spread of COVID-19.
Secondly it becomes more targeted to those in need, as it re-establishes a decline in turnover eligibility test to maintain access to the fixed wage subsidy for both the December 2020 and March 2021 quarter.
Revised eligibility tests - forecast no longer acceptable
Businesses will need to re-test turnover eligibility. It will require businesses to demonstrate an actual decline in revenue against a comparable period rather than forecasts.
Employers will be required to demonstrate their requisite turnover declined by the required amount for both the June and September quarters to be eligible for JobKeeper payments covering the December quarter.
Additionally, employers will need to demonstrate they also meet the turnover decline across the December quarter to remain eligible for JobKeeper payments through to March 28, 2021.
Two-tiered wage subsidy
With respect to the lower fixed wage subsidy, a two-tiered system removes some of the distortions particularly for casuals. There will now be two tiers of JobKeeper payments, delineated by how many hours eligible staff worked before the COVID-19 pandemic in February.
There are still some practical issues such as what documentation is required to prove hours worked particularly for active participants will need to be provided in due course.
Another problem will come up t the surface about eligibility for new businesses that report GST quarterly that commenced making sales after 1 January 2020.
What is a Two TierSystem?
$1,500 / fortnight continues until 27 September 2020, and then the payments will be grouped into to two categories:
• Four weeks of pay periods prior to 1 March 2020 worked on average more than 20 hours /week
• Active Business participant in the month of February 2020 worked more than 20 hours /week