The Federal Government yesterday announced that the JobKeeper and JobSeeker payments will be extended beyond the previously announced end-dates in September 2020.
This is a positive development, although the level of the benefit available and some of the terms applicable to the schemes has changed.
This is the link to the government announcement (https://treasury.gov.au/coronavirus?utm_source=ExactTarget&utm_medium=Email&utm_term=6106632&utm_campaign=&utm_content=), which also contains further detail and links to further resources.
This follows earlier communications (further down the news page) that provide detail on the above schemes, hence the detail below focuses only on the key changes that were confirmed yesterday. As always, if you're unsure about the impact of the changes on your situation or if you'd like more information then please contact our office.
What is JobKeeper
It's a business support package with payments made to employers, not employees (however the payments must be on-paid to employees). The overall design of the policy is to assist employers in keeping employees on their books.
How has JobKeeper worked until now?
Employers become eligible if their business turnover has reduced by more than 30% vs last year (if the business has less than $1 billion in turnover) or has reduced by more than 50% vs last year (if the business has turnover above $1 billion).
Eligible employers have qualified for a payment of $1,500 per fortnight per employee. This rate will continue until 27 September 2020.
The JobKeeper payment rate will change after 27 September 2020:
The rate of the JobKeeper payment will reduce in two tranches:
Tranche 1 - 28 September 2020 to 3 January 2021:
The maximum payment will be:
The maximum payment will be:
Eligible employees are those who worked in the business in the 4 week period prior to 1 March 2020 (ie: during February 2020). The ATO has indicated some discretion for employees who were on leave or otherwise absent during this period.
Otherwise eligibility remains the same as the initial phase of JobKeeper and responsibility will fall to the employer to keep records of those employees receiving the benefit and the amount being received.
Note changes to the turnover test:
Businesses will need to show a continued declined in turnover to remain eligible for the JobKeeper payment:
For Tranche 1 - 28 September 2020 to 3 January 2021:
The business will need to prove a decline in GST turnover in the June and September 2020 quarters in comparison with the same quarters in 2019.
For Tranche 2 - 4 January 2021 to 28 March 2021:
The business will need to prove a decline in GST turnover in the June, September and December 2020 quarters in comparison with the same quarters in 2019.
The ATO will have discretion to assess individual circumstances to determine eligibility. Where uncertainty exists business owners should approach the ATO or seek clarification from their tax adviser.
A reminder - the impact on superannuation, tax and social security:
The JobKeeper payments won't be eligible for superannuation contributions.
The JobKeeper payments will be treated as taxable income.
The JobKeeper payments will be assessable income for Centrelink purposes.
What should you (or anyone you know) do if they're currently financially impacted?
As JobKeeper payments are only paid to registered businesses, it's suggested that those impacted by the crisis contact their employer to check if the employer qualifies and if they intend to register. Those who are self-employed can apply via the ATO.
If their employer won't register or is unable to register for any reason then individuals whose employment has been impacted by COVID-19 are advised to see if they qualify for JobSeeker benefits.
What is JobSeeker ?
JobSeeker (previously known as 'Newstart' or the 'dole') is a payment to individuals who qualify on the basis of being unable to find paid employment or earning below a certain level of income.
How has JobSeeker worked until now?
In March 2020 the government announced that the usual JobSeeker asset test requirement and the 'mutual obligation' requirement would be temporarily removed in recognition of the impact of COVID-19.
Generally speaking those who are single would qualify for a JobSeeker benefit if their income were less than $28,249 pa, though it could be up to $55,243.50 pa if caring for dependents.
Those who are a member of a couple would qualify if their income were less than $25,831 pa (depending on their partner's income) or if they had no income and their partner's income were less than $79,788.80 pa.
The amount of the JobSeeker entitlement was also increased by $550 per fortnight (known as the 'coronavirus supplement') meaning that the benefit increased to $1,115.70 per fortnight (for singles without dependents) and up to $1,340.10 per fortnight (for those with dependents).
The above rules and rates remain valid until 25 September 2020.
Changes to the 'coronavirus supplement' from 25 September 2020:
From 25 September 2020 until 31 December 2020 the JobSeeker benefit will be boosted by a coronavirus supplement of $250 per fortnight (instead of $550 per fortnight).
The government has indicated that they will review the supplement again ahead of the conclusion of the newly announced period.
Changes to JobSeeker income test requirements from 25 September 2020:
From 25 September 2020 until 31 December 2020 those receiving a JobSeeker benefit will be able to earn up to $300 per fortnight (the current rate is $106 per fortnight).
Entitlement to JobSeeker will reduce by 60 cents for every dollar of income per fortnight over the $300 threshold level (the rate is 40 cents per dollar for those who are principal carer parents).
Changes to JobSeeker partner income test requirement from 25 September 2020:
From 25 September 2020 the partner of those receiving a JobSeeker benefit will be able to earn up to $80,238.89 pa before the JobSeeker benefit reduces to nil.
For every dollar that a partner earns over $300 per fortnight, the recipient's JobSeeker benefit will reduce by 27 cents (currently 25 cents, although the increase in the income threshold to $300 per fortnight means that no JobSeeker recipient will be worse off as a result).
Changes to JobSeeker asset test requirement from 25 September 2020:
The assets test will be reinstated from 25 September 2020 for all recipients (new and existing). There's no change to those assets that qualify for assessment (ie: the recipient's primary residence is excluded from the test).
For singles the maximum level of assets that can be held to qualify for JobSeeker is:
Reintroduction of the mutual obligation requirement:
Those applying for JobSeeker will now need to meet mutual obligation requirements. This necessitates various activities to continue to be eligible for the benefit - please refer to this link for more information (https://www.servicesaustralia.gov.au/individuals/topics/mutual-obligation-requirements/29751).
How are JobKeeper and JobSeeker working together?
The rules that apply until 27 September 2020 mean that it's unlikely that an individual who's receiving JobKeeper will also qualify for JobSeeker as their income level will be too high (JobKeeper benefits are assessable income for Centrelink benefit purposes).
However, with the reduction in the JobKeeper benefit level it's possible that an individual may qualify for both benefits (with their JobSeeker entitlement impacted by the level of their JobKeeper entitlement).
Additionally, Centrelink has indicated that those who lose their concession card entitlements due to JobKeeper benefits will retain their cards for a period of time in recognition of the temporary nature of the JobKeeper program.
Please contact our office if any further information is needed and we'll respond ASAP.
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