Megan Breen | October 2020
This article was current at the time of publication.
As businesses continue to struggle as a result of the ongoing COVID-19 crisis, the JobKeeper Payment scheme has been extended by six months until 28 March 2021.
While welcome news for many, practitioners who have already spent time and resources to help clients navigate the first round of JobKeeper should be prepared for more work.
Changes to the scheme mean the $1500 fortnightly payment to 3.5 million workers was reduced on 28 September 2020 and will drop again 4 January 2021.
The extension is expected to bring the cost of the scheme to about $86 billion, with predictions 1.4 million people will be on JobKeeper in the final three months of this year, dropping to one million during the first quarter of 2021.
Businesses need to prove a 30 per cent decline in turnover each quarter to remain eligible for the program after September. The decline in turnover test – based on actual GST turnover – will be retested quarterly.
A two-tier payment system has also been introduced, based on a worker’s average weekly work hours during a reference period. Payments will fall from $1500 to $1200 a fortnight for full-time workers as of October 2020.
People working fewer than 20 hours a week will receive $750 and the payments will fall again to $1000 a fortnight for full-time workers, and $650 a fortnight for part-time workers for the first three months of 2021.
What does this mean for practitioners?
Elinor Kasapidis, Tax Policy Adviser at CPA Australia, says the extension brings further challenges for practitioners, notably the need to calculate actual GST turnover for a comparable period with clients.
Unlike the first round, which worked on projected turnover, businesses cannot adjust for things such as capital asset sales and must make the calculations based on what has been supplied.
“While it is meant to be simpler in terms of how you work out the declining turnover, there will be an increase in workload initially as practitioners calculate this with clients,” Kasapidis says. “As with anything, there are always questions and things to check.”
Practitioners will also need to work closely with clients to establish eligible employees’ working hours to determine which payment tier they can claim.
“There are practical ways to work this out, using timesheets and employment agreements, for example,” Kasapidis says. “While businesses don’t need to offer it to the Australian Taxation Office [ATO] as evidence, they do need to have it ready in case they come back and check.”
Road to recovery
With varying restrictions in place across the country, parts of Australia are returning to normal, while states such as Victoria continue to feel the economic impact.
While the extension is essential for some industries, because the ultimate aim is to taper off financial support, practitioners should be using their time now to begin working with clients on their next initiatives.
“It’s been a really positive thing to see practitioners servicing their clients in a very compassionate and empathetic way during the pandemic,” Kasipides says. “From a business advisory perspective, practitioners may now need to support their clients in different ways.
“We still have businesses closed in some states, and there are also industries that have been very affected, such as tourism, as well as businesses that are still recovering from the bushfires and haven’t had the opportunity to rebuild – they will continue to need the support of their accountant to navigate the path out.”
The stricter eligibility criteria also means potentially difficult conversations with those who may not meet the requirements of the new test but are still suffering the economic impact of the past six months.
“For those coming off JobKeeper, there will be other conversations to have,” Kasipides says. “Now is a good time to look at the business as a whole and start asking them [clients], ‘What is next? Is it business recovery, or exit?’”
Supporting you in recovery
CPA Australia has developed tools and resources to help practitioners and clients navigate the challenges ahead and build towards a reimagined future. You can access them in our Road to Recovery pages.
The JobKeeper payment scheme has been extended until 28 March 2021.
From 28 September 2020 employers need to demonstrate that their actual GST turnover has fallen against a comparable period and tier 1.0 and tier 2.0 JobKeeper rates apply and are generally based on average hours worked by employees.
Employers do not need to enrol again to claim payments in the first extension if they are already enrolled in JobKeeper. They just need to check their eligibility and submit this information online from 1 October 2020.
Employers also need to tell the ATO the payment tier they are claiming for each eligible employee or business participant in their November monthly business declaration.
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