Extension of JobKeeper “UPDATED”

The Treasury has announced the following update in relation to the JobKeeper program:

1. JobKeeper 1.0 will remain till 27 September 2020 and
2. thereafter, JobKeeper 2.0 will continue for a further six months till 28 March 2021.

The changes to JobKeeper are:

• There will be two rates of JobKeeper payments for eligible businesses (including self-employed) and not-for-profits:

1. From 28 September 2020 to 3 January 2021:

• A $1200 payment per fortnight for:

  –  eligible employees who worked 20 hours or more a week on average in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, and

  –  eligible business participants who were actively engaged in the business for 20 hours or more per week on average

• A $750 payment per fortnight for other eligible employees and business participants.

2. From 4 January 2021 to 28 March 2021:

• $1000 payment per fortnight for:

  –  eligible employees who worked 20 hours or more a week on average in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, and

  – eligible business participants who were actively engaged in the business for 20 hours or more per week on average

• A$650 per fortnight for other eligible employees and business participants

The JobKeeper payment will be tapered in the December and March quarters to encourage businesses to adjust to the new environment, supporting a gradual transition to economic recovery. The two-tiered payment aims to better align the payment with the incomes of employees before the onset of the COVID-19 pandemic.

• Further changes were announced on 7 August 2020 to adjust the employee reference date for eligibility and make it easier for organisations to access JobKeeper. From 3 August 2020, the relevant date for employment will move from 1 March to 1 July 2020.
• The thresholds for the decline in turnover test will remain the same but now the test must be applied at several points:

  –  To be eligible for the JobKeeper payments from 28 September 2020 to 3 January 2021, businesses and not-for-profits must satisfy the relevant decline in turnover test for the September quarter 2020 (July, August, September) only based on actual GST turnover.

  –  To be eligible for the JobKeeper payments from 4 January 2021 to 28 March 2021, businesses and not-for-profits must satisfy the relevant decline in turnover test for the December quarter 2020 (October, November, December) only based on actual GST turnover.

The requirement to reassess the eligibility for the JobKeeper payments over the extension period is to ensure that only the businesses that need the most help will continue to receive the payments.

The JobKeeper payment will remain open to new recipients provided they meet the existing eligibility requirements and the additional turnover tests during the extension period.

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

The period with the higher number of hours worked is to be used for employees with 1 March 2020 eligibility.

Employers will continue to be required to make payments to employees equal to, or greater than, the amount of the JobKeeper payment (before tax), based on the payment rate that applies to each employee (i.e. the wage condition).

The changes are expected to be implemented through amendments to legislation and the legislative instrument, Coronavirus Economic Response Package (Payments and Benefits) Rules 2020.

If you have any questions, please contact your Accountant for further clarification.

The Treasury has announced the following:

1. JobKeeper 1.0 will remain till 27 September 2020 and;
2. thereafter, JobKeeper 2.0 will continue for a further six months till 28 March 2021.

The changes to JobKeeper are:

• There will be two rates of JobKeeper payments for eligible businesses (including self-employed) and not-for-profits:

1. From 28 September 2020 to 3 January 2021:

• for eligible employees and business participants who worked 20 hours or more a week on average in the month of February 2020 – A$1200 per fortnight
• for eligible employees and business participants who worked less than 20 hours a week on average in the month of February 2020 – A$750 per fortnight.

2. From 4 January 2021 to 28 March 2021:

• for eligible employees and business participants who worked 20 hours or more a week on average in the month of February 2020 – A$1000 per fortnight
• for eligible employees and business participants who worked less than 20 hours a week on average in the month of February 2020 – A$650 per fortnight.

The JobKeeper payment will be tapered in the December and March quarters to encourage businesses to adjust to the new environment, supporting a gradual transition to economic recovery. The two-tiered payment aims to better align the payment with the incomes of employees before the onset of the COVID-19 pandemic.

• The thresholds for the decline in turnover test will remain the same but now the test must be applied at several points:
  • To be eligible for the JobKeeper payments from 28 September 2020 to 3 January 2021, businesses and not-for-profits must satisfy the relevant decline in turnover test for the June quarter and for the September quarter based on actual GST turnover.
  • To be eligible for the JobKeeper payments from 4 January 2021 to 28 March 2021, businesses and not-for-profits must satisfy the relevant decline in turnover test for each of the June, September and December quarters based on actual GST turnover.

The requirement to reassess the eligibility for the JobKeeper payments over the extension period is to ensure that only the businesses that need the most help will continue to receive the payments.

The JobKeeper payment will remain open to new recipients provided they meet the existing eligibility requirements and the additional turnover tests during the extension period.

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

Employers will continue to be required to make payments to employees equal to, or greater than, the amount of the JobKeeper payment (before tax), based on the payment rate that applies to each employee (i.e. the wage condition).
The changes are expected to be implemented through amendments to the legislative instrument, Coronavirus Economic Response Package (Payments and Benefits) Rules 2020.

Changes to the JobSeeker program include:

• The JobSeeker coronvirus supplement will decrease to A$250 a fortnight from A$550. Therefore, people on JobSeeker will receive a decrease from A$1100 to A$800 (base rate of A$550 plus the coronavirus supplement) per fortnight after September.
• Recipients will be allowed to earn A$300 a fortnight before facing a reduction in their Government payment.
• Easing of restrictions for sole traders.

In conjunction with the Government’s announced changes, Treasury has released the report, The JobKeeper Payment: Three-month review. The Government considered the findings in the report in formulating its changes to the JobKeeper payment.

If you have any questions, please contact your Accountant for further clarification.

About the program
The NSW government have introduced new measures to help provide relief for landowners of residential and commercial landowners who provide a reduction in rent to a tenant who is experiencing financial distress as a result of the COVID-19 crisis.

The COVID-19 land tax relief is intended to reduce a landowner’s land tax payable for 2020, by up to 25% for a taxable parcel of land where rent relief has been given to the tenant who occupies the land.

Landowners whom are eligible for the reduction may also defer their land tax payments by up to three months.

Reduction in land tax payable
If you are eligible, you will receive a reduction in your land tax payable for the 2020 Land Tax Year. Subject to the terms provided in the guidelines below.

The reduction will be the lesser of:

• the amount of rent reduction provided to a tenant for any period between 1 April 2020 and 30 September 2020,
• 25% of the land tax attributable to the land leased to that tenant.

Land tax attributable to a parcel of land is calculated as follows:

Taxable value of the land divided by aggregate taxable value of all parcels of land, multiplied by landowners’s 2020 land tax liability.

If you haven’t completed payment of your land tax before 2020, the relief will reduce or offset the amount you have left payable. If you have already paid your land tax for 2020, the reduction can be refunded to you.

3 month deferral of outstanding land tax
If you are eligible for this program, and receive a reduction, you’ll also be able to have your outstanding land tax payments deferred for up to three months

Eligible criteria
You will be eligible if:

• you’re leasing a parcel of land to:
  – a commercial tenant, who has an annual turnover of up to $50 million, or
  – a residential tenant
• the tenant is in financial distress as a result of COVID-19,
• you reduce the rent of the affected tenant for any period between 1 April 2020 and 30 September 2020, and
• for 2020, you have land tax attributable to the parcel of land leased to that tenant.

Financial distress
A tenant is considered to be in financial distress where:

• for commercial tenants – there is a reduction in turnover compared to a previous comparable period of 30% (or more),
• for residential tenants – there is a reduction in household income of 25% (or more).

You are responsible for verifying that your tenant is in financial distress.

Rent reduction
In order to be eligible, the rent reduction must not be required to be paid back at a later date. If a reduction in rent is provided, but is required to be paid back at a later date, this is considered to be a deferral of rent and will not be considered as a reduction of rent under this program.

If you are not eligible for the reduction in land tax or a deferral in land tax repayments under this program, but are experiencing difficulty in paying, you can still apply for a payment plan, to extend your payment due date. Click here to apply.

How to apply
To apply for the 2020 land tax COVID-19 relief, you will need to do so via Service NSW. Click here to access the application to apply for the program.

You will need the following too complete your application:

• MyServiceNSW Account
• Land Tax Client ID (can be found on your land tax assessment notice in the top right corner of the front page)
• Land Tax Correspondence ID (can be found on your land tax assessment notice in the top right corner of the front page, under the Land Tax Client ID)
• Land details for the parcel of land you are applying for the relief for
• Supporting documentation to demonstrate eligibility for the program
  (examples of supporting documents include, but are not limited to:
  – to demonstrate that your tenant is in financial distress, as defined in the guidelines provided by Revenue NSW. (eg. your tenant’s financial statements, a letter from their accountant or property manager etc.
• Your tenant’s permission to share their information with Revenue NSW.

Should any additional evidence be required to help establish the eligibility or validity of an application, Revenue NSW will contact the applicant directly.

Revenue NSW have advised that their aim is to process applications on a 30 day turnaround.

Other conditions
If you are applying for this program, once you have submitted the application, you must notify Revenue NSW by submitting an amended application as soon as possible, if there are changes in your circumstances or eligibility for this program. This includes a change in tenant or a change in rent during this period for which an application has been submitted.

An amendment to an application may result in a change to the amount of reduction in tax previously provided, under this program.

Any reassessment of a 2020 land tax liability that occurs after a reduction in land tax previously provided to you under this program.

Applications submitted for the 2020 Land Tax COVID-19 relief will be subject to potential compliance review for legitimacy.

Eligibility of both landowners and tenants can be reviewed to confirm that relief under this program has been submitted correctly.

Providing false or misleading information in an application for this program, or not notifying Revenue NSW of any changes in your circumstances, may result in a land tax reduction under this program being revoked. It is also an offence to provide false or misleading information and penalties may apply.

We have seen a large number of clients enrolling for the $1500 a fortnight JobKeeper payment being offered by the Federal Government. If you have not enrolled or need to revisit your current situation please see our Covid-19 series of articles on our website. The government has extended the time to enrol to 30 May 2020.

As of 4 May 2020 the tax office will be accepting declarations of eligible for employees and business turnover reductions for employers to assess payment of the first two Jobkeeper instalments for the fortnights ended 12 April 2020 and 26 April 2020. Payments will be made to eligible employers nominated bank accounts from the first week in May 2020.

Employers will need to pay eligible employees a minimum of $1500 for each of these fortnights BEFORE 8 May 2020. One payment of $3000 can be made as long as it covers these two fortnights. Note the tax office has extended this date from that previously advised.

Recap of  Jobkeeper steps required to this point

1. Check if you and your nominated employees meet the eligibility requirements.
2. Notify eligible employees that you (their employer) intend to participate in the JobKeeper scheme.
3. Send eligible employees the JobKeeper Employee Nomination Notice to complete and return to you.
4. Keep the Employee Nomination Form on file for five years.
5. Pay the minimum $1,500 to each eligible employee per JobKeeper fortnight. The first fortnight starts on 30 March and ends on 12 April. Alternatively, employers can make one combined payment of $3,000 for the first two fortnights paid by end of 8 May 2020.
6. Enrol for JobKeeper from 20 April using the Business Portal and authenticate with myGovID or have enrolment processed by a tax professional through the online tax agent portal.
7. Subscribe to updates on the ATO website, so the ATO can advise when new information is available.

Steps in preparing eligible employee declaration and reduction in turnover (employer ) declaration

1. Assess eligibility  of employees jobkeeper-payment/employers/your-eligible-employees
2. Assess business turnover reduction for employers jobkeeper-payment/employers/eligible-employers
3. Report information to the tax office

For businesses set up for Single Touch Payroll (STP) enabled software

All of the relevant information will be captured within your STP enabled software. The major software providers have added functionality to assist in calculating eligibility for both employees and for the reduction in business turnover. Whilst this functionally is of great assistance in reporting Jobkeeper information there are several requirements to set up the reporting which you may require our assistance. Should this be the case the Economos team have been fully trained on these systems and are ready to assist where required on a do and charge basis. (We strongly suggest if you do not have STP compliant software that you ask for our advice on setting it up the right software package for you).

For businesses not set up for Single touch Payroll (STP) enabled software

To lodge declarations you will need to do this manually through your business portal using your myGovId or through our professional tax agent portal. Please contact your partner or manager if you require our assistance. (Fees will apply based on the complexity of your situation).

The Commissioner of Taxation has released several different (alternative) tests to assess decline in turnover when applying for JobKeeper payments. Previously the government released what is known as the “basic test” to assess a fall in revenue compared to a previous comparable period e.g March 2020 compared to March 2019.  Where businesses have special circumstances which make this comparison difficult these new  “alternative tests” may be used.

The alternative tests apply in the following cases:

• commencement of a business;
• acquisition or disposal of a business;
• business restructures;
• substantial increases in turnover during a prior period;
• drought or natural disasters;
• irregular turnover periods that are not cyclical;
• where there is sickness, injury or leave of a sole trader or a partner of a small partnership.

Basically, the taxation commissioner may apply these tests if  “some event or circumstance … outside the usual business setting” makes the relevant comparison of turnover used in the ‘Basic Test” inappropriate. If these new tests are satisfied, businesses may still meet the decline in revenue test which (subject to other criteria)  may make the $1500 a fortnight JobKeeper payment available to all eligible employees.

Further reading can be found at JobKeeper Decline in Turnover tests.

Next Steps
The application of the Alternative Test Rules is very fact specific and requires a number of GST turnover calculations to be made. Due to the wide reaching nature of the alternative tests, clients will likely be able to test using at least one of these alternative methods. Given the deadline for access to the first two JobKeeper payments is drawing near, clients should start looking at these alternative tests now. Please contact your Economos partner or manager for further information or for assistance in applying these measures.