What does JobKeeper 2.0 mean for you?

The details for the extension of the JobKeeper support payments, dubbed JobKeeper 2.0, were announced on Tuesday 21 July 2020. JobKeeper 2.0 will run for a further 6 months from the 28 September 2020 to 28 March 2021. 

There will, however, be changes to ensure it better supports those organisations, and their employees, that continue to be significantly impacted by the Coronavirus. From 28 September 2020, eligibility for JobKeeper 2.0 will be based on actual turnover in the relevant periods with the payment rate reduced and a tiered scale with a lower payment rate for those who work fewer hours.

Other eligibility rules remain unchanged.

The JobKeeper 2.0 - Payment rate

Originally, the JobKeeper payment was a flat $1,500 per fortnight to eligible employees of eligible businesses. The Government review showed that that this resulted in some employees receiving more than they did under their normal employment arrangement pre-coronavirus.    

From 28 September 2020 to 3 January 2021 (period 1), JobKeeper 2.0 rates will be reduced:

• $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the eligible business or not-for-profits for 20 hours or more a week on average, and for eligible business participants (such as self employed traders) who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
• $750 per fortnight for other eligible employees and business participants.

From 4 January 2021 to 28 March 2021 (period 2), JobKeeper 2.0 rates will be further reduced:

• $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the eligible business or not-for-profit for 20 hours or more a week on average and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and
• $650 per fortnight for other eligible employees and business participants.

Businesses and not-for-profits will be required to nominate which payment rate they are claiming for each of their eligible employees or business participants.

JobKeeper 2.0 - Additional turnover tests (2 period testing)

In order to be eligible for the first period of JobKeeper 2.0 extension to 3 January 2021, businesses and not-for-profits will need to demonstrate that their actual GST turnover has significantly fallen in both the June quarter 2020 and the September quarter 2020 relative to comparable periods (generally the corresponding quarters in 2019).

To be eligible for the second JobKeeper 2.0 extension period from 4 January 2021 to 28 March 2021, businesses and not-for-profits will again 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 (generally the corresponding quarters in 2019).

To be eligible for JobKeeper 2.0, businesses and not-for-profits need to demonstrate the following decline in turnover over the above periods:

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

Notably, the previous turnover test was a prospective test (businesses needed to have expected to see a 30% reduction), the new test will be based on an actual reduction in turnover across the past two quarters, and into the next quarter. 

This is in addition to all other existing eligibility requirements for the current Jobkeeper Payment.

JobKeeper 2.0 will continue to remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period.

JobSeeker payments and the coronavirus supplement

Criteria for those eligible to receive the Coronavirus Supplement are to remain the same and the payment period to extend from 25 September 2020 to 31 December 2020. However, the amount of the supplement will be reduced to reflect the anticipated improving economic conditions. The Government is also changing some of the eligibility criteria and reintroducing obligations for payment to encourage recipients to seek work.

The current Coronavirus Supplement will continue to be $550 per fortnight for payments up to and including the period ending 24 September 2020.

But, from 25 September 2020 to 31 December 2020, the Supplement amount will reduce to $250 per fortnight. As per current arrangements, anyone who is eligible for the Coronavirus Supplement will receive the full rate of the Supplement during the relevant time period.

Effectively the JobSeeker payment rate will be reduced from $1,100 to approximately $800 per fortnight.

Adjusting the income taper limits

On a positive note, the income (test) free area for JobSeeker and Youth Allowance (other) payments will increase from $106 per fortnight and $143 per fortnight respectively to $300 per fortnight for both, effective for the period from 25 September 2020 to 31 December 2020.

This means that recipients of these payments can earn income of up to $300 per fortnight and still receive the maximum payment rate of JobSeeker Payment or Youth Allowance (other).

Also, the previous tiered income test taper rate that applied to both payments will be replaced with a single income test of 60 cents for every dollar of income earned above $300 per fortnight.

However, for JobSeeker Payment recipients who are principal carer parents, the current income free area and lower 40 cents taper rate continues to apply.

Adjusting access to payments

Access to payments will change from 25 September 2020 to ensure more specific targeting of income support:

• Means testing — From 25 September 2020:
  • Asset testing for all payments will be reinstated, for both existing and new recipients; and
  • The Liquid Assets Waiting Period (LAWP) for all payments will be reinstated.
• Partner income testing - the partner income test cut-out will increase to $3,086.11 per fortnight, or $80,238.89 pa, for individuals with no personal income, from 25 September 2020. The taper rate will increase from 25 cents to 27 cents. With the higher income cut-out as a result of changes to income testing for JobSeeker Payment, no one will be worse off under these temporary changes.
• Expanded criteria - JobSeeker Payment and Youth Allowance (other) criteria will continue to provide payment access for permanent employees who are stood down or lose their employment and sole traders, the self-employed, casual workers and contract workers who meet the income and assets tests until 31 December 2020.
• Reduced waiting times - The Ordinary Waiting Period, Newly Arrived Resident’s Waiting Period (NARWP) and the Seasonal Work Preclusion Period will continue to be waived until 31 December 2020.
  • Income Maintenance Periods and Compensation Preclusion Periods will continue to apply

The gradual reintroduction of mutual obligation requirements commenced on 9 June 2020 and will continue to apply.

Access to Super extended to 31 December 2020

The rules allowing early access to superannuation have also been extended to 31 December 2020. Eligible Australian and New Zealand citizens and permanent residents are now able to access up to a further (the next) $10,000 from 1 July 2020 until 31 December 2020. The Government is extending the application period for the measure from 24 September 2020 to 31 December 2020 to increase the scope for individuals who may still be financially impacted by Coronavirus to access early release in the coming months.

It should be noted that:

• The eligibility criteria to access super remain unchanged;
• This is NOT an additional $10,000 amount.  The period to access the second $10,000 amount has simply been extended to 31 December 2020;
• The option is NOT available to temporary visa holders

Conclusion

Overall, the extension to the coronavirus package seem to steer a reasonable line between continuing support to a broad range of participants, reducing a perceived incentive not to return to work, a better targeting of support payments and taking the first steps to take the economy off life support.