Clue you’ll miss out on JobKeeper cash
When the government announced it would extend the JobKeeper payments for another six months, many Aussies breathed a sigh of relief.
The news was overwhelmingly seen as a positive sign the government was committed to supporting businesses and workers through the coronavirus crisis - but a tax expert has warned two crucial details have been largely overlooked.
The original payments were due to finish at the end of September, but the extension means support will now be in place until March 28 next year.
However, the payments will be slashed from $1500 to $1200 a fortnight and shift to a new two-tiered payment that's tougher to qualify for.
Employers will have to prove a drop in turnover of 30 per cent for businesses with turnover under $100 million in both the June and September quarters to receive the December quarter payment.
They'll also need to reassess their eligibility for the March quarter payment, demonstrating declines in the June, September and December quarters.
And while the initial JobKeeper subsidy was costed at $70 billion, just $16 billion has been put aside for the second round.
According to Ben Johnston from leading Sydney accounting firm Willett Johnston Partners, there are two "glaring" issues with JobKeeper 2.0.
"The main issue is that when it was originally rolled out, it was anticipated to cost $70 billion over a six-month period. Now they're openly expecting the six months added on to cost $16 billion, which means they're only expecting a 20 per cent uptake after September. That figure alone tells you they are expecting a significantly lower uptake," Mr Johnston said.
"That means an enormous amount of people won't be covered by JobKeeper, which is huge as they've scaled right back."
And he said the requirement to have drops in revenue in both the June and September quarters would likely exclude many businesses which had experienced a "delayed response" to the crisis.
"That turnover test will exclude a lot of businesses … that aren't getting JobKeeper (now) because they still had a lot of projects on the books, but which might soon not have any more work," he said.
Mr Johnston said under the extension, businesses also wouldn't know if they were eligible until the last moment, which made it difficult to plan staffing arrangements.
"It will cause a debacle in its own right in my opinion because how can you forecast conditions without knowing exactly (if you'll be eligible)?" he said.
"It will 100 per cent lead to job losses and a spike in unemployment without a doubt because there is a lot of uncertainty about eligibility.
"Businesses will want to forward-plan staff and budgets but if they don't know if they will be eligible until the last minute, they won't know who they will be able to keep on."
Mr Johnston stressed he wasn't criticising the government as it had set up the infrastructure for the initial stimulus quickly in response to the unfolding crisis. But he said the new eligibility criteria would cause a lot of uncertainty.
He added that while there had been a lot of positivity around the extension, many had overlooked that key detail in the fine print which showed far fewer Aussies would actually benefit from the end of September.
"Yes it has been extended, but $16 billion is a tiny figure compared with $70 billion - they must be super confident the economy will bounce back, otherwise I can't see anything other than unemployment going through the roof," Mr Johnston said.
"And it's not as if we're moving through a positive time at the moment, so it seems they are assuming positivity in a time that remains uncertain, which is bizarre."
Meanwhile, H&R Block director of tax communications Mark Chapman told news.com.au changes to the rate of payments would also be "quite a drop".
Under the new plan, JobKeeper would change from a $1500 per fortnight flat rate to $1200 for full time workers and $750 for part-timers, with the payments set to drop further in January 2021 and a "trimming" of the JobSeeker coronavirus supplement from $550 to $250 come September.
However, Mr Chapman said it was "interesting" that moving forward, some people would be able to double dip and claim both payments at the same time, which would help "cushion the blow" of the reduced rates.
"For business owners, the worst things about the compliance burden put on them is that they will have to work their way through a whole host of new eligibility tests," he said.
"In the first place, they had to prove a drop of 30 per cent, but now they will have to go back and basically reapply for JobKeeper … which will be a lot of work for small businesses and they will need the assistance of accountants as obviously they won't want to get that wrong.
"The biggest issues is that businesses that have potentially seen a recovery in turnover will no longer meet the threshold, but later in the year, depending on what happens, it could drop again - but once you're out, you're out for good."
Mr Chapman said with a second wave of infections now plaguing NSW and Victoria, businesses which had started to recover could be hit with another downturn - but if they fail to qualify for JobKeeper, jobs would be lost.
"Nobody really knows what the state of businesses will be at the end of September so they're planning for an eventuality that may not happen," he said.
"The key to this is that nothing is changing until the end of September so if you're already on JobKeeper, it will carry on as normal until then.
"For small businesses, it is definitely worth talking to your accountant to understand what the impact of the changes could be."
Originally published as Clue you'll miss out on JobKeeper cash