As you are aware the JobKeeper Payment in its current form will cease on 27th September 2020. However, on 21st July the Government advised that JobKeeper will be extended in a modified way with the end point now being 28th March 2021.
The key changes are:
- The introduction of JobKeeper Extension 1 from 28th September to 3rd January 2021; and
- The introduction of JobKeeper Extension 2 from 4th January to 28th March 2021.
- The payment rate of $1500 per fortnight for eligible employees and business participants will be reduced to $1200 in Extension 1 and $1000 per fortnight in Extension 2.
- From 28th September 2020 businesses and not-for profits seeking to claim JobKeeper will be required to demonstrate that they have suffered an ongoing significant decline in turnover on actual GST Turnover in June, September and December quarters.
- Businesses will have to meet the following tests:
- If they have a turnover of $1 billion or less, they will need to demonstrate a decline in turnover of 30% or less and charities and not-for-profits of 15%; and
- Their actual GST turnover has significantly fallen in both June and September 2020 quarters relative to comparable periods in the 2019 financial year.
It is clear that the JobKeeper payment has been refined to be more specific and targeted. This does have unintended consequences for those businesses on the fringe.
For example, let's take a business such as a commercial fit out company. They started claiming JobKeeper in June because no new work was coming in. When they submitted for JobKeeper their actual turnover figures for the June quarter were down by 35% due to a decent April and May but a terrible June.
In July, August and September the company has been on JobKeeper which has meant it has kept its staff and allowed it to tender for new work. The company has also continued along with smaller projects.
In late July the company was awarded a significant project with a very quick turnaround time. This project commenced 1st August and was completed by 30th November 2020. This meant that compared to last year their turnover was only down by 20% for the September quarter. Taking the two quarters together, the company was down by 28% but because of the good September quarter the company could no longer receive JobKeeper.
This is a pattern we believe will affect many small businesses. Whilst their turnover may be down significantly, it may not be down enough for them to receive the stimulus.
This means that business owners need to take steps now to prepare for the stimulus stopping for their business.
On 28th August 2020 at 12.30pm I will be hosting a webinar on Preparing for the Precipice: how to survive after the stimulus stops.
The webinar will discuss 4 key things that a business owner or business advisor, such as an accountant, needs to be aware of to protect the business and the assets of the directors or owners.
It is critical that you or your business clients take proactive steps to prepare their business for when the stimulus stops.
If you have any questions between now and the webinar on the 28th of August 2020 please reach out. We offer a free first conference to all clients to discuss how their business can not only survive but thrive after the stimulus stops.
I hope to see you there!
This is not legal advice.