JobKeeper and JobSeeker changes announced by the Federal Government

22 July 2020

Yesterday, The Prime Minister and Treasurer announced an extension of the JobKeeper and JobSeeker payments as well as changes to the schemes that will take effect after the planned end date in September. 

JobKeeper 2.0

Key points:

  • Jobkeeper “1.0” will continue as planned until 27 September 2020
  • Jobkeeper “2.0” will apply for a further 6 months from 28 September 2020 through to 28 March 2021
  • The current $1,500 per fortnight subsidy will be reduced from 28 September 2020 with the introduction of a two tiered payment system.
  • Access to Jobkeeper 2.0 will depend on satisfying the decline in turnover tests for both the June and September 2020 quarters with the test reapplied for the December 2020 quarter for continued access from 4 January 2021.

The JobKeeper scheme which was originally due to end this September has been extended for a further 6 months for businesses and not for profits that continue to be in financial distress due to COVID-19. 

From 28 September 2020 to 3 January 2021, JobKeeper payments will be $1,200 a fortnight for eligible full-time workers and eligible business participants. Eligible employees and eligible business participants that worked fewer than 20 hours a week will receive $750 per fortnight.

JobKeeper payments will be further reduced starting on 4 January 2021. From 4 January 2021 to 28 March 2021 eligible fulltime workers and eligible business participants will receive $1,000 a fortnight. Eligible employees and business participants that worked less than 20 hours a week will receive $650 a fortnight. 

In order to determine how many hours that an eligible employee has worked, the four weeks for pay periods before 1 March 2020 will be assessed. Eligible business participants will be entitled to the higher rate where they were actively engaged in the business for 20 hours or more per week on average in the month of February 2020.

The Commissioner of Taxation will have the discretion to set out alternative tests where an employee or business participant’s hours were not usual during February 2020.

From 28 September 2020, businesses and not for profits seeking to claim JobKeeper will be required to satisfy the decline in turnover test for the two periods of the extension using actual GST turnover.

  • In order to be eligible for the first JobKeeper payment extension period of 28 September 2020 to 3 January 2020, businesses will need to demonstrate that their actual GST turnover has significantly fallen in the both the June quarter 2020 and the September quarter 2020 relative to comparable periods.
  • In order to be eligible for the second JobKeeper payment extension period of 4 January 2021 to 28 March 2021, businesses will need to demonstrate that their actual GST turnover has significantly fallen in each of the June, September and December 2020 quarters relative to comparable periods.

Broadly, the rules will remain unchanged in order to demonstrate that turnover has significantly fallen. The decline in turnover must be:

  • 50% for businesses with an aggregated turnover of more than $1 billion;
  • 30% for businesses with an aggregated turnover of $1 billion or less; or
  • 15% for Australian Charities and Not for profits Commission-registered charities.

These changes do not impact on the eligibility of a business to continue to access the JobKeeper scheme through to 27 September 2020. For example, if a business does not meet the turnover test in the extension period this will not result in the business ceasing to be eligible for JobKeeper payments up to 27 September under the current rules.

JobSeeker Update

The temporary Coronavirus Supplement for those on JobSeeker has been extended from 25 September 2020 until 31 December 2020 this year. However, there will be a reduction in these payments as well as a tightening of the eligibility requirements. The main changes that were announced are outlined below:

  • The COVID-19 supplement payments will be reduced from $550 to $250 from 25 September 2020; this supplement will run out by the end of the year.
  • The income free area that is available to those who are on JobSeeker will increase from 25 September 2020. People who are on JobSeeker will be able to earn up to $300 without it affecting the JobSeeker payment;
  • From  4 August 2020, people receiving JobSeeker will be required to connect with employment services and undertake four job searches a month. Penalties for people who don't meet that requirement are also coming back, as well as for anyone who refuses a job that's been offered to them.
  • From 25 September 2020, the Government is also reinstating the assets test and increasing the partner income test cut-out.

Please note the above information is from the media release announcing these measures and the fact sheet that has been released by Treasury outlining the proposed extension of the JobKeeper Payment. Appropriate legislation will need to be enacted, and the ATO will have similar discretionary powers to set out alternative tests for certain eligibility criteria to those powers that the ATO currently in relation to the current JobKeeper Payment Scheme. Therefore, there may be further changes to the measures before they become law and come into effect.

A copy of the media release from the Prime Minister’s office announcing these measures can be found here.

Further information about the JobKeeper extension and the proposed changes can be found on the Treasury’s fact sheet. Click here.

Further information on the proposed changes to JobSeeker can be found here.

We will send more information as it becomes available. Please contact your local Boyce accountant for more information.

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