JobKeeper Extension

18 September 2020

In July 2020, the Government announced that the existing JobKeeper Scheme would be extended until 28 March 2021 but with changes to the payment rates and to how the decline in turnover is tested.

Legislation to extend the scheme has now received royal assent and this week, both the Treasurer and the ATO have now registered legislative rules regarding how the extended scheme will be applied. 

With the extended JobKeeper scheme beginning in just over a week, this brief provides the key information you need to know.

JobKeeper Extension – Key changes

The extended JobKeeper scheme will retain many of the features of the current scheme, with the following notable changes applying from 28 September 2020:

  • Two separate extension periods exist.

For each extension period, the decline in turnover test must be retested and the rate of payment is reduced.

  • A two-tier payment rate will apply based on the numbers of hours worked in a reference period by an employee or the number of hours an eligible business participant was actively engaged in the business during the reference period.
  • Alternative tests may be applied in determining which payment rates apply.
  • Employers and businesses will need to nominate the rate they are claiming for each eligible employee and/or eligible business participant.

TIP: If you are currently topping up your employees’ pay to satisfy the wage condition, ensure that you review and update your top up payments, and superannuation where you choose to pay for hours not worked, according to the relevant tier rate for both Extension periods 1 and 2 as appropriate.


Eligibility under the revised turnover tests 

How a business applies the decline in turnover test under the extended scheme will depend on which extension period they are applying the test in, and whether the business is a new or existing participant in the JobKeeper Scheme.

To qualify for payments under the extended Scheme, entities must satisfy both the original decline in turnover test and an additional test.

Existing participants

Businesses participating in the current JobKeeper scheme are not required to apply the original decline in turnover test again (as they have already satisfied the test), however, must satisfy the actual decline in turnover test for the relevant extension period.

NOTE: Existing participants are not required to re-enroll for the extended scheme and employees are not required to renominate if their employer is claiming payments for them under the current JobKeeper scheme. They will however need to advise the ATO of the relevant payment rate of employees, as detailed further below.

New participants

Businesses wishing to enrol in the extended scheme will be required to satisfy both tests.  Practically speaking however businesses that satisfy the actual decline in turnover test, will also satisfy the original decline in turnover test, due to the extension of the testing periods.

NOTE: Eligibility to JobKeeper Extension 2 does not require eligibility to either the current scheme or to JobKeeper Extension 1.

Actual decline in turnover and turnover comparison periods

For those businesses with an aggregated annual turnover of over less than $1 billion, the decline in turnover test will be satisfied for each period where:

Timing of supplies

Unlike the original decline in turnover test, under the extended scheme there is only one method businesses can use to determine when they make a supply.  Supplies must be allocated to a period on a GST reporting basis, even if you are not registered for GST.

We welcome this change, which was introduced following acknowledgement of the complexity of the previous “timing of supply” rules, to provide compliance savings to businesses.

Essentially, businesses that report GST on their Business Activity Statements (BAS) on an accrual basis will count supplies to the turnover test at the earlier of when an invoice is issued, or payment is received. For businesses reporting on a cash basis, the supply will count when payment is received.

Businesses that are not registered for GST can choose the accounting method (i.e. a cash or accrual basis) they wish to use and must apply the relevant GST attribution rules for the purposes of determining when they have made supplies.

A consistent method must be applied across each relevant comparison period.

Specific rules will apply to those businesses that have changed their accounting basis during the year, however they will generally be required to use their accounting basis from the first tax period of the relevant comparison period.

NOTE: Whilst the new measure will provide compliance savings, the flexibility of determining when a supply is made that was afforded in the first version of JobKeeper has now been removed and businesses will essentially be locked into using a particular attribution method.  This may mean that the method that a business used to determine eligibility under the current JobKeeper scheme will not be available for use under the extended scheme.

Determining eligibility

As detailed above, those businesses registered for GST, are expected to assess their eligibility based on details reported in their BAS.  Given the lodgement date for the September and December BAS do not align with the start of the extension periods, businesses will need to assess their eligibility for the extended scheme in advance of these lodgement dates. 

It is expected that this information should be available from the GST reporting functions of most business accounting software, however it is imperative that the invoicing of supplies and receipt of debtors collections is up to date and entered into the accounting records on a timely basis, rather than simply as a month or quarter ended process.

Those businesses that are not registered for GST will be required to work out their GST turnover using their existing business records that show where they issued invoices or received payments.

The payment tiers

A two-tier payment system will apply to each employee and eligible business participant based on their total working hours in the applicable reference period.

To be eligible for the Tier 1 rate (i.e. the higher rate) an employee or an eligible business participant needs to satisfy the 80-hour requirement in respect of the relevant reference period/s.  Where an employee is a 1 March employee, the employer must assess both February and June reference periods to assess whether the employee would have worked more than 80 hours in either reference period.

Eligible business participants are also required to make a declaration to the ATO stating that the 80-hour threshold test was met.  Where no declaration is made, the Tier 2 rate will apply regardless of the number of hours of active engagement in the business by the business participant.

Satisfying the 80-hour test

For employees, it has now been made clear that hours include actual hours worked and hours of paid leave (i.e. including but not limited to annual leave, whether taken at full or half pay for example under purchases leave arrangements, long service leave, sick leave and paid public holidays) during the reference period. 

TIP: Employers will generally only be required to determine the hours worked for part time and casual employees as it is expected that full time employees will meet the minimum number of hours required to access the Tier 1 rate.

The 80-hour threshold test for eligible business participants is based on hours of active engagement in the business.

Active engagement by an individual, whilst not defined is taken to include actively operating the business or undertaking specific tasks in business development and planning, regulatory compliance or similar activities in an applicable reference period. 

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

NOTE: Once a payment rate has been determined for an individual, it is not required to be retested and will apply, where relevant for the duration of the extended scheme.


It is expected that employers will use their existing employment records (i.e. payroll data, timesheets or employment contracts) to determine whether employees meet the 80-hour threshold.  Under industrial law, employers are generally required to keep records of hours worked by casual or irregular part time employees that are paid on an hourly basis, so it is expected that such records would be readily available to employers.

The Commissioner has discretion to apply the Tier 1 rate where the Commissioner is satisfied that the hours of the individual are not readily ascertainable and in such cases may determine that specified circumstances are taken to apply such that the higher rate may be applied. 

The hours of an individual may not be readily ascertainable where the amount paid to an individual by the business is not tied to an hourly or contracted rate or where there are no or incomplete records of the relevant hours.

It is important to note that this discretion will only apply to certain classes of individuals.  For example, for individuals paid on a commission basis and to which no records of their hours have been kept, the Commissioner has discretion to apply the higher payment rate where that individual is paid $1500 or more in salary, wages or commissions during the reference period.

TIP: 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.  Penalties for making false and misleading statements will apply should an individual be found to have made a false declaration.

The reference periods

TIP: Pro rata calculations will need to be performed if an employer has a monthly pay cycle, to test hours back to a 28-day reference period.

The Commissioner also has the power to determine that an alternative reference period can be applied if the standard reference period is not suitable.  The alternative reference periods will only apply to specified classes of individuals.  These classes of individuals include those eligible employees:

  • who fail to meet the 80-hour threshold test; and
  • when compared to earlier 28-day periods, it is found that the reference period is not representative of the employee’s usual hours; and
  • where a specified circumstance applies, such as where an employee was employed part way through the reference periods or where the business changed hands.

The hours worked in a particular reference period may not be representative of an employee’s standard hours where for example:

  • the employee has taken unpaid leave such as sick leave or parental leave; or
  • an employee’s hours of work varies due to roster schedules for example in FIFO arrangements.

An employer must be able to identify the circumstances which affected the number of hours worked.  For these specified classes of individuals, the Commissioner will allow employers to look back to an earlier 28-day period that is representative of the employee’s normal hours, when such circumstances did not exist, and use this as the reference period for determining whether the 80-hour test is satisfied.  For those employees whose hours vary due to roster scheduling, it may be permissible to use an average of hours worked over the employee’s rostering schedule and proportionately adjusted over 28 days, to work out the hours in a typical 28-day period.

Other examples of specified circumstances include where an employee was not employed during the reference period or where the first pay cycle ended on or after 1 March 2020 or on or after 1 July 2020 or where an employee was transferred to another entity within a wholly owned group.

For these classes of individuals, the Commissioner will allow the employers to look forward to a later 28-day period, where the alternative reference period is the first 28-day pay period ending on or after 1 March 2020 or 1 July 2020 that wholly occurs during a pay cycle.

Where an eligible business participant is required to consider an alternative reference period, for example if they were not actively engaged in February 2020 due to sickness they must consider the most recent 29-day period, wholly within a calendar month ending before 1 March 2020 that was representative of their typical engagement.

Where the business participant only commenced to be engaged after 1 February 2020 but before 1 March 2020, a forward looking 29-day period would be appropriate.

NOTE: There may be more than one reference period (including an alternative reference period) that applies to an individual. If the individual satisfies the 80-hour threshold in any one of these reference periods, the Tier 1 rate will apply.

Notification requirements

Businesses must:

  1. Notify the ATO which payment rate applies to each eligible employee – failure to make a valid notification will result in a loss of eligibility for JobKeeper payments for that period.
  2. Notify each individual (excluding sole traders) within seven days of notifying the ATO of the payment rate applied.
Not eligible for the extended scheme?

For those employers that do not qualify for the extended scheme but have experienced a decline in their turnover of at least 10%, a concession exists in which they can continue to access temporary Fair Work Act JobKeeper enabling directions.

These temporary provisions include directions to reduce employees’ ordinary hours by 40 per cent of the hours they worked before the pandemic struck, and directions in relation to duties and location of work. However, the annual leave directions that were permitted during the original JobKeeper scheme will cease to have effect from 28 September 2020 for all employers, regardless of whether entitled to the extended JobKeeper scheme or due to satisfaction of the 10% decline test.

To access this concession, employers must obtain 10 per cent decline in turnover certificate from either a registered tax agent, a BAS agent or a qualified accountant.

Small-business employer?

Those businesses with less than 15 employees are not required to obtain a tax agent decline in turnover certificate and are instead permitted to provide a statutory declaration regarding the businesses’ decline in turnover.  This declaration must be completed by the employer or someone that is both authorised by the employer and has knowledge of the employer’s financial matters.

Think you qualify for the extension scheme?  Here’s what you need to do

From 28 September 2020, participating businesses must do all of the following:

  • Work out the payment rate that applies to each eligible employee and/or eligible business participants.
  • Notify the ATO and the eligible employees and/or eligible business participants what payment rate applies to them
  • Meet the wage condition – i.e. during Extension period 1 businesses must pay their eligible Tier 1 employees at least $1,200 per fortnight and all other eligible employees at least $750 per fortnight.

TIP: Business registered for GST should lodge their BAS for the September 2019 and December 2019 quarters as soon as possible (or for equivalent months, if they report monthly) as the ATO has advised that un-lodged BAS may hold up payment applications under the extension scheme.

New participants can enrol in the scheme at any time subject to meeting the eligibility requirements however to claim payments for the October JobKeeper 2020 fortnights, new participants must enrol by end of October.  The ATO will allow an extension to the timeframe (to 31 October 2020), for employers to meet the wage condition for the first two JobKeeper fortnights (i.e. starting 28 September 2020 and 12 October 2020)


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 18 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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