How will the changes to JobKeeper affect SMEs?

How will the changes to JobKeeper affect SMEs?

With COVID-19 continuing to be troublesome in Australia, the government announced an extension to the JobKeeper program on 21st July, labelled JobKeeper 2.0. This will come into force on 29th September and last until 28th March 2021. These changes have been welcomed by many SMEs who fear that without financial support they will no longer be able to operate under COVID-19 restrictions.  

Entitlement for the JobKeeper program, however, will change from the current one-time test to ongoing eligibility, along with reduced payments to eligible employees. It’s possible that these changes may have a negative impact on some SMEs if they can’t fulfil the new criteria for the JobKeeper 2.0 program. Conversely, others will reap the benefits of ongoing government support during the pandemic. 

New eligibility criteria for JobKeeper

Currently, to be eligible for JobKeeper, businesses must prove eligibility by satisfying the “decline in turnover” test with the “test period” being either a relevant month or quarter. This test must only be satisfied once, even if your circumstances change. Businesses must also send monthly turnover data to the ATO (both current and projected turnovers), however if your turnover returns to pre-COVID19 numbers, you were still eligible for the JobKeeper program. As of 29th September, these requirements will change:

The new requirements of JobKeeper 2.0 are based on a comparison of quarterly turnover. So to be eligible for the JobKeeper 2.0 program during the October to December 2020 quarter you must satisfy the “decline in turnover” test in the two previous quarters: April to June 2020 and July to September 2020.  For the January to March quarter, you must satisfy this test during the three previous quarters: April to June 2020, July to September 2020 and October to December 2020.

The rates of payments will also be changed from the current $1500 per fortnight for eligible employees to $1200 from 29th September and to $1000 from 4th January 2021 for employees working more than 20 hours per week. For employees working less than 20 hours per week, these fortnightly payments will be reduced to $750 from 29th September and $650 from 4th January 2021. These fundamental changes have been designed to ensure that businesses suffering the most from COVID-19 receive the financial support they need to remain open, while encouraging future sustainability and planning for these affected businesses. If your SME is eligible for continuing JobKeeper payments, it is anticipated this boost and support will assist in continuing operations and retaining your employees into 2021. Let’s hope that by this time, the COVID-19 restrictions will be lifted and Australia can return to the new ‘normal’. 

Whilst the exact details of the decline in the turnover test are yet to be released for the October to December 2020 quarter, it’s believed that some of Australia’s most heavily impacted SMEs will benefit from these changes. These include hospitality and tourism, entertainment and the airline industries. It’s also important to remember that many businesses in both Victoria and NSW are suffering through a second round of restrictions. Hopefully, these new changes to the JobKeeper 2.0 program will be sufficient to help these businesses remain in operation until the restrictions lift.  

At Insurance Advisernet, we encourage any of our customers who are struggling through the COVID-19 pandemic in Australia to reach out. If you need advice about reducing your insurance risks or want to discuss whether your current policies are still relevant in these challenging times, please talk to an insurance specialist today and find your local adviser.

General Advice Warning

The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.

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