Accounting profession waits on JobKeeper 2.0 guidance
The accounting profession has cautiously welcomed the extension to JobKeeper as it awaits further guidance from the Treasury and the ATO.
The government has announced a reshaped, six-month extension to the JobKeeper program after it was due to expire on 27 September.
JobKeeper 2.0 will now see different payment rates and eligibility requirements over the December 2020 and March 2021 quarters.
From 28 September 2020 to 3 January 2021, the JobKeeper payment will be reduced to $1,200 per fortnight for those who work 20 hours or more a week, and $750 for those who work less.
To be eligible, businesses and not-for-profits will need to demonstrate that their actual GST turnover has met the decline in turnover test for each of the June and September 2020 quarters.
From 4 January to 28 March 2021, the rate will fall to $1,000 per fortnight, and $650 for people working less than 20 hours a week.
Entities will be required to retest their eligibility again, and will need to demonstrate that they have met the decline in turnover test for each of the June, September and December 2020 quarters.
Chartered Accountants Australia and New Zealand tax leader Michael Croker said that while the extension was welcomed, accountants would need further details around the eligibility criteria ahead of the September change.
“Legislative details of the tightened eligibility criteria need to be designed and road-tested well before being enshrined in law,” Mr Croker said. “Parliament needs to debate the new model.
“In particular, the proposed retesting based on actual GST turnover every quarter to determine continuing JobKeeper eligibility means that most businesses will look even more closely at their billing and cash-flow arrangements.
“For those businesses with fluctuating fortunes, once JobKeeper is lost because of a once-off good quarterly result, it appears there’s no way back into JobKeeper if things go pear-shaped the next quarter.”
At this stage, the only guidance has come from the Treasury’s new fact sheet that notes entities “will generally be able to assess eligibility based on details reported in the business activity statement (BAS)”.
It states that because the deadline to lodge a BAS is generally due the following month, “businesses and not-for-profits will need to assess their eligibility for JobKeeper in advance of the BAS deadline in order to meet the wage condition”.
The Institute of Public Accountants general manager of technical policy Tony Greco said he hopes guidance on actual GST turnover will be set out clearly ahead of implementation.
“Hopefully, there is no repeat of the turnover debacle we experience as part of JobKeeper version 1,” Mr Greco said.
“Under the existing rules, turnover is the value of supplies made in the relevant period including GST-free supplies but excluding input-taxed supplies.
“Prior to the release of LCR 2020/1, the ATO’s website guidance, tweaked multiple times in a matter of weeks, failed to make it clear that the cash and accruals methods were concessionary methods, and did not make this clear until the release of the LCR.
“The LCR makes it abundantly clear that the law requires the taxpayer to allocate supplies made to each relevant period and then work out the value of the supply, and that accruals, cash and other accounting methods are practical, concessionary, fallback alternatives.”
Time to adjust
With the rate and eligibility changes only coming into effect from 28 September, CPA Australia’s tax policy adviser, Elinor Kasapidis, welcomed the lead time to implement the incoming changes.
“It is great to see that the government has responded to our feedback and ensured that the profession has sufficient notice to understand the changes and advise their business clients appropriately,” Ms Kasapidis said.
“The advance notice is welcomed as many businesses will require professional advice to determine the best course of action and what they might need to do to re-qualify.”
Ms Kasapidis, however, has urged the government to consider funding a voucher scheme for small businesses to access crucial professional advice at a time where they might not be able to afford it.
“Even with this announcement, cash flow will remain tight, meaning many businesses may not seek out advice, jeopardising their future,” she said.
“To encourage small businesses to ask for much-needed help, the government should provide them with a voucher that they can redeem for professional advice.
“As with the original JobKeeper, it will be tax agents who are key to the success of the extension to JobKeeper.”