Explained: What sole traders and small businesses must do to access JobKeeper 2.0

It’s t-minus 20 days until JobKeeper 2.0 replaces the existing wage subsidy program, kicking thousands of businesses across the country off the scheme under tighter eligibility rules.

But for those hoping to retain access to the government payments, there are some things you need to know about how JobKeeper 2.0 is going to work.

The Australian Taxation Office (ATO) has issued new guidance to businesses about the JobKeeper extension, and although some of the finer points are still being settled, it has been clarified that businesses will not need to re-enroll into the program or re-assess employee eligibility.

Here’s what we know:

Small businesses: How to prepare for JobKeeper 2.0

The second phase of JobKeeper kicks off on September 28 and will run to January 3, 2021.

The same fortnightly payment schedule as the first phase of the program will apply, including existing wage payment deadlines.

Under JobKeeper 2.0 there will be two tiers of payments, depending on how many hours staff have worked for in the past. This bit is important because the language appears to have changed since the federal government first announced the extension in July.

While it was initially announced workers would receive the higher tier of payments if they worked 20 hours or more for their employer each week in February, the ATO has since moved to a monthly measurement.

Under new guidance, eligible employees who worked 80 hours or more in the four weekly pay periods before either March 1 or July 1 will receive the tier one rate, worth $1,200 per fortnight before tax.

All other eligible staff that do not meet this threshold will be paid under the second tier, worth $750 a fortnight.

Businesses are required to nominate the rate they are claiming for each eligible worker, but do not need to re-assess eligibility or gain additional permission for staff that are already being paid under the program.

As was the case under JobKeeper phase one, businesses are required to meet the minimum wage condition (i.e. paying their workers first) before being reimbursed through the subsidy scheme.

Sole traders: How to prepare for JobKeeper 2.0

Sole traders looking to claim JobKeeper payments for themselves under the second phase will need to provide declarations about their involvement in their businesses during February.

Essentially, eligible business participants must have been actively engaged in their business for 80 hours or more in February to claim the higher tier of payments, worth $1,200 per fortnight.

Sole traders who don’t make this declaration will be entitled to the lower tier, worth $750 a fortnight.

Eligibility: What business owners need to know

To be eligible for JobKeeper 2.0 payments, businesses must show an actual fall in turnover of at least 30% for the September 2020 quarter, including calculations of GST turnover for the September 2019 comparison quarter.

While the ATO has yet to provide specific details on how this calculation should be undertaken, Business Activity Statements (BAS) will be integral.

“For many businesses registered for GST, this calculation will match the ‘total sales’ reported at G1 on your BAS minus GST payable (1A), where applicable,” the ATO said.

“You can provide additional turnover information to demonstrate that you satisfy the actual fall in turnover test for the September quarter from the start of October onwards. You must provide it before you complete your November monthly declaration.”

What about alternative tests?

The ATO says it will make some alternative tests available for special circumstances soon.

What about JobKeeper 3.0?

From January 4, 2021 to March 28, 2021, JobKeeper will move from phase two to a third stage.

JobKeeper 3.0 will be ostensibly the same as the second phase, albeit with lower payments:

• The first (higher) tier will be worth $1,000 per fortnight; and
• The second (lower) tier will be worth $650 per fortnight.

This second extension will require businesses to demonstrate an actual fall in GST turnover of at least 30% in the December 2020 quarter against a comparable period in 2019.

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