Important JobKeeper Updates

24 September 2020

With the current JobKeeper Scheme due to end this week and the extended scheme starting on Monday 28 September 2020, the following brief aims to provide you with the latest JobKeeper updates.

This article will be of particular interest to the following taxpayers:

  • Sole traders, directors, partners (partnerships) and adult beneficiaries wishing to access the higher JobKeeper payment rate.
  • Those businesses in which an appropriate comparative 2019 testing period does not exist.  For example, those businesses that started after the comparison period (i.e. September 2019 for the first extension period), or those businesses that acquired or disposed part of their business.
  • Those employers that currently qualify for JobKeeper payments but will not be eligible for either or both of the extended JobKeeper schemes and who may need access to the Fair Work Act JobKeeper modifications.


Key dates for assessing the payment tiers

All participants (i.e. existing and new) in the first extension period of JobKeeper 2.0 will have until 31 October 2020 to meet the wage condition for the first two fortnights of the extended scheme.   This ATO concession provides additional time for employers to assess the correct payment amount for each employee.  Existing employers should however ensure that they stop the existing $1,500 per fortnight payments to employees, and adjust pay runs after 28 September to incorporate the revised tier payments, for which they have until 31 October to attend to for the first two fortnights.  Notification of the payment rate must be made to the ATO in the October Monthly Business Declaration (due 14 November 2020).

Demonstrating eligibility to the tier 1 payment rate for individuals other than employees

A two-tier payment rate will apply based on the number of hours an eligible business participant was actively engaged in the business during the month of February 2020.  To be eligible for the Tier 1 rate (i.e. the higher rate) individuals will need to satisfy the 80-hour requirement in respect of this month.

Active engagement by an individual is not defined, however the ATO has now released guidance regarding what it considers to be active engagement in a business.  Specifically, an eligible business participant will be actively engaged in their business if they regularly spent time on the following activities:

  • Providing services or selling goods
  • Supervising and managing the performance of employees
  • Negotiating contracts with suppliers and customers including providing quotes
  • Drawing up business plans and planning or budgeting reports
  • Managing the record keeping and accounts, including the use of the documents for analysis
  • Making financial, legal and tax decisions, including time spent on obtaining professional advice (for example ensuring the business complies with legal and regulatory obligations)
  • Managing commercial risks of the business

Eligible business participants will not be actively engaged in the business simply because they:

  • own an interest in the business or invest capital in it, or
  • provide advice or other assistance to the business from time to time.

Accordingly, where a business participant held a separate full time job, or the business operations were not active in February or where all or most duties or activities were carried out by other employees, then it would be likely that the business participant would not satisfy the test.

Businesses and eligible business participants must be able to reasonably demonstrate the basis on which they determined that a business participant was actively engaged in the business for the required number of hours during the reference period.  In this regard, the ATO’s guidance states that records to prove the 80 hours over the 29-day reference period will need to be kept, and these include business diaries, appointment books, log books, hours billed, invoices issued, time sheets or attendance records, or records prepared for other business or statutory purposes.

Where an eligible business participant meets the 80-hour test (of active engagement in the business), the individual (except for those participants that are sole traders) must make a declaration to the business that the 80-hour threshold test has been met by them.  Where no declaration is made, the Tier 2 rate (i.e. the lower rate) will apply regardless of the number of hours of active engagement in the business by the individual.  The business must then inform the ATO of the payment rate that applies and within 7 days of notifying the ATO, must also advise the eligible business participant of the specified payment rate.

The ATO further advises that penalties for false and misleading declarations will be enforced, with individuals being jointly and severally liable for overpayments that occur because of the false statement made by them leading to the higher-tier payment rate.

Decline in turnover test – revised alternative tests registered

Ahead of the start of the extended JobKeeper scheme on Monday, the Commissioner of Taxation has registered the Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules (No 2) 2020. These Rules set out the alternative tests that can be used to determine if the decline in turnover test is satisfied for the purposes of determining eligibility to payments under the extended JobKeeper scheme.

Decline in turnover test – A recap

Under the extended scheme there are two separate extension periods. For each extension period, an additional actual decline in turnover test applies and the rate of the JobKeeper payment is different.

The extension periods are:

  • Extension 1: from 28 September 2020 to 3 January 2021
  • Extension 2: from 4 January 2021 to 28 March 2021

For each extension period, businesses will be required to demonstrate that their actual GST turnover has declined by the requisite percentage in the relevant 2020 quarter relative to a comparable period (generally the corresponding quarter in 2019).

As with the current JobKeeper scheme, businesses may consider the availability of the alternative decline in turnover tests as provided by the Commissioner where there is not an appropriate relevant comparison period in 2019.

The new alternative tests remain similar to those alternative tests provided under the current JobKeeper scheme, with current GST turnover replacing projected GST turnover in the revised tests, as well as other modifications, primarily changing the reference period to quarters rather than months.

It is not stated in the Rules that entities that used an alternative test to test their decline in turnover as part of the current JobKeeper scheme must use a similar alternative test as part of the extended scheme, and as such it is expected that businesses can use the test that best suits their circumstances.

ALERT: In a change from the current scheme, those businesses that will apply for the extended scheme using one of the alternative tests must now advise the ATO that their eligibility is subject to using an alternative test.

NOTE: The new legislative instrument also confirms that in applying the alternative tests, GST registered taxpayers will be expected to calculate their current GST turnover using the same accounting method that is used for GST reporting purposes (i.e. cash or accruals).  Those businesses that are not registered for GST can choose the method but must use a consistent approach.

A summary of the 7 alternative tests has been provided below.

NOTE: For Category 4 and Category 6 of the alternative tests, entities have the option of also using the 1 March 2020 testing date.  This allows entities to avoid using a period that has been impacted by the economic disruption caused by COVID-19.


As detailed in our recent JobKeeper update on 18 September 2020, a concession exists under the Fair Work Act for those employers that do not qualify for the extended scheme but have experienced a decline in their turnover of at least 10%.

The concession allows such employers to continue to access the temporary Fair Work Act JobKeeper enabling directions, such as reducing an employee’s working hours or standing down an employee, albeit that the employer will no longer be eligible to receive any further JobKeeper payments.

ALERT: From 28 September 2020, the Fair Work Act  annual leave directions that are currently permitted under the original JobKeeper scheme will cease to have effect for all employers regardless of eligibility to the extended scheme.

Two extension periods but three periods to be considered

There are three periods in which an employer requires a certificate in order to issue appropriate directions to its employees.  For each of these periods, the 10% decline in turnover test must be met in the relevant 2020 quarter.

Timing is relevant

In order for a legacy JobKeeper employer to make a JobKeeper related Fair Work Act direction or request during either of the extension periods, the employer must hold a 10% decline in turnover certificate at the time the direction or request is given.

Furthermore, any JobKeeper enabling directions or agreements that are already in place under the JobKeeper provisions will automatically end on:

  • 28 October 2020, if the above conditions aren’t met for the September 2020 quarter
  • 28 February 2021, if the above conditions aren’t met for the December 2020 quarter.

ALERT: The certificates can only be provided by registered tax agents, BAS agents and qualified accountants.  In-house accountants and tax managers will not be able to provide these certificates.

Employers need to assess now

Given the time it may take to carry out the relevant consultations and obtain the necessary legal and business advice regarding enacting a Fair Work Act direction, it is strongly recommended that businesses* participating in the current JobKeeper scheme consider their eligibility for the extended scheme now and seek to obtain a 10% decline in turnover certificate, where relevant, as soon possible.

Tip: *Small businesses with less than 15 employees that qualify for the Fair Work Act concession are not required to obtain a certificate but must provide a statutory declaration regarding the businesses’ decline in turnover.  Rules exist about who can provide this declaration within a business.

ALERT:  The 10% decline in turnover certificate will be required for each of the above periods in which an employer wishes to access the Fair Work Act modifications.

Understanding employment rights is imperative

Prior to issuing any employment direction (JobKeeper related or otherwise), it is strongly recommended that employers seek independent employment law advice to fully understand their rights and obligations and the effect of any directions given (or proposed to be given) to employees.

Where we can assist you

If you would like to discuss any matters in this newsletter in further detail, please do not hesitate to contact your Cooper Partners Engagement Team.

This newsletter is current as of 24 September 2020, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
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