Tuesday 21st July 2020
The Morrison government has announced the extension of the JobKeeper wage subsidy which was due to expire at the end of September 2020. The scheme is now being extended for a further six months, bringing the new end date to 28 March 2021.
The new JobKeeper scheme for the additional six months will cost $16 billion, bringing the total cost to $86 billion.
The announcement highlights the severity of COVID-19’s impact on the economy so far, an impact that is expected to hit businesses well into the new year.
The changes outlined below aim to keep people employed in the coming months, while also addressing some of the criticisms that came about as part of the initial scheme released in April this year.
One of the criticisms that seems to have been addressed is the reduction in payments to employees who generally work reduced hours. As part of the initial wage subsidy, an employee who normally earned under the $1,500 a fortnight payment was still eligible to receive the full $1,500.
The new arrangement means that workers who work less than 20 hours a week will receive a reduced payment.
The changes announced today do not affect existing JobKeeper payments or eligibility up until the original end date of 27 September 2020, and the eligibility rules for employees remain unchanged.
So, what are the changes?
There will be a gradual reduction in the amounts you will receive as part of the new JobKeeper wage subsidy, and there will also be a re-test of your business eligibility to receive the further payments.
How much will you receive?
If the eligibility criteria is met, from 28 September to 3 January, JobKeeper will involve two payments:
- $1,200 a fortnight for eligible workers who work more than 20 hours a week
- $750 per fortnight for eligible workers who work less than 20 hours per week.
- $1,000 a fortnight for eligible workers who work more than 20 hours a week
- $650 per fortnight for eligible workers who work less than 20 hours per week.
How will your business be eligible?
In order to be eligible for the extended JobKeeper wage subsidy for the period 28 September to 3 January, businesses and non-for-profits will need to demonstrate that their actual GST turnover for both the June 2020 & September 2020 quarters has fallen by at least 30% (businesses with aggregated turnover of less than $1 billion) or more relative to comparable periods in the prior financial year.
A further re-test will be required to be eligible to receive the wage subsidy for the period 4 January to 28 March 2021. This test includes demonstrating the GST turnover drop for the June, September, and December 2020 quarters relative to comparable periods in 2019.
What if I am a Business Participant?
We are of the view that “no changes to employment criteria” from the initial JobKeeper program, suggests that Business Participants will still be eligible. That of course, will be relevant if all other criteria is met and subject to any legislation that is released for JobKeeper 2.0.
Download the Treasury fact sheet at the top of this email for more detail.
There is no doubt that this year has been one of the most challenging that businesses have faced in their history, with many forced to close temporarily or run at a significantly reduced capacity.
Whilst we continue to work remotely, our team at MKS Group remains committed to helping our clients in any way that we can so please reach out to us at any time for further information or assistance.
You can contact us through our normal office number (03) 9374 8400, through your usual contact points or by clicking on the link below.
Stay Safe & Healthy.