JobKeeper – Alternative decline in turnover tests

The alternative tests for JobKeeper have just been released. You can find the legislative instrument here. The detailed explanatory notes for these tests can be found here.

We will bring you an update on how to apply for this as soon as we can – it’s complex and there are 7 different scenarios covered by these rules.

In the meantime, the ATO confirms that if an entity is able to pass the basic turnover reduction test then they don’t need to consider the alternative tests (i.e., the alternative tests cannot make an entity ineligible for JobKeeper if they have already passed the basic test).

Alternative test for service entities

An alternative decline in turnover test will apply to special purpose employment entities such as service entities. In circumstances where an employment entity is utilised within a group of companies, and that employment entity is unable to demonstrate a sufficient decline in its own turnover, the employment entity will be able to refer to the decline in turnover of the operating entities it services. This should allow some special purpose service entities that provide employee labour to group members to access the JobKeeper scheme, although we are still waiting to see the detail of these new rules. See Treasury fact sheet.

The alternative test will refer to the combined GST turnovers of the related group members using the services of the employer entity. 

Integrity provisions will allow the Commissioner to prevent access to JobKeeper where there are “material compliance or integrity concerns with an entity’s use of the test.” 

‘One in, all in’ principle strengthened

The controversial ‘one in, all in’ principle is being strengthened. There was some confusion for a while as to whether an employee could be kept out of the JobKeeper registration if they were receiving less than $1,500 per fortnight, but this seems to have been resolved. Regardless of whether an employee would normally expect to receive at least $1,500 per fortnight, it looks like they are still an eligible employee if the other basic conditions are satisfied.

Where an employer has agreed to be a part of the JobKeeper scheme and the employee has agreed to be nominated, employers cannot select which employees will participate in the scheme. The Treasurer states that this feature of the scheme will be made clearer – although does not specify how.

Eligibility changes for 16 & 17 year olds

Full time students who are 17 years or younger and not financially independent have been excluded from receiving JobKeeper payments. This change will apply prospectively so employers who have already paid employees will not be out of pocket. Clients should take this change into account before making further payments to these employees. 

Changes for charities and religious institutions

  • To meet the decline in turnover test, eligible charities will be able to choose to use either their total turnover or turnover excluding government revenue to assess their eligibility for JobKeeper.
  • Eligible religious institutions will be able to receive JobKeeper payments for each eligible religious practitioner (ministers of religion or a full-time member of a religious order) for which they are responsible under the tax law.
  • Changes will be made to enable entities endorsed under the Overseas Aid Gift Deductibility Scheme or for developed country relief to meet the requirement that not-for-profits “pursue their objectives principally in Australia”. Employee eligibility remains subject to the residency requirements.

The full details of these changes are not yet available but we will bring you these as soon as they are released.

JobKeeper enrolment extended into May

While the deadline for enrolling in JobKeeper to access payments for the first 2 fortnights was originally the end of April, the ATO now notes, “If you need more time, you have until the end of May to enrol and identify your employees.”

However, employers will need to ensure they have paid eligible employees by the end of April to be eligible for April JobKeeper payments for those first 2 fortnights.

Also, enrolling for JobKeeper late is likely to lead to delays in receiving the funds from the ATO.

Extension of time to pay wages for the month of April

The ATO has just announced that for the first two fortnights (30 March – 12 April, 13 April – 26 April), they will accept the minimum $1,500 payment for each fortnight has been paid by employers even if it has been paid late, provided it is paid by 8 May 2020. If you do not pay your staff by this date, you will not be able to claim JobKeeper for the first two fortnights.

As a warning, employers must be aware that, despite the fact they can now pay their employees as late as 8 May 2020 and still be eligible for JobKeeper Payments for fortnights 1 and 2, they are still required to pay their employees a further $1,500 by 10 May 2020 in relation to JobKeeper fortnight 3 (which ends on the same day). At the current time, no extension to this date has been announced and it would be unwise for employers to anticipate that there will be one.

What are your next steps?

We will bring you more details as we get clarification. However if you have queries or require further assistance with applying for JobKeeper; reach out to the HCG team here.