COVID-19 Business Support: JobKeeper – Why you should hope for the best but plan for the worst

Confused about the JobKeeper payment and whether you should register for it? 

Read more from Sam McGregor, Master Builders Australia’s Policy & Industry Adviser in our Safety, Contracts, Workplace Relations team about how and why it’s good to be positive but also plan for the plan for the worst. 

The various health directives and public restrictions announced in response to COVID-19 saw many parts of the economy suffer impacts that were immediate and dire.

Building and construction has fortunately remained ‘open for business’ but this doesn’t mean our sector is immune from any challenges now, or that problems won’t get worse in the future. 

Many members are telling us that while they have managed to navigate through the impact of COVID-19 so far, the future is far from certain.  

Every day we are increasingly hearing that forward work plans are nowhere near the levels expected in conventional years, and the next 6-12 months are looking gloomy.

While everyone in the sector is working tirelessly to keep doors open with the hope that a post-pandemic economic recovery will bring an uptick in business conditions, simply ‘hoping for the best’ has never been a sound business strategy.

Yes, confidence and optimism about the future of your business is important – but planning for the worst is absolutely crucial.

Planning for the worst must include looking at JobKeeper, the Government’s central business support measure designed to support jobs and businesses significantly affected by COVID-19.

JobKeeper might not be on your mind now, but it could be the key to your business survival if conditions worsen or recovery takes a long time.

JobKeeper is different to many conventional government assistance schemes with some unique features. Master Builders has produced a detailed guide to help you understand JobKeeper but here are some key points you should think about when planning for the worst.

• A three-step process: In simple terms, JobKeeper works with a three-step process. First, a business enrols to be part of the scheme. Second a business demonstrates eligibility for both itself and workers then claims for payments. Third, the business continues to meet ongoing obligations to pay eligible employees and keep appropriate records about their payments and turnover.
• You can enrol in the scheme now, even though you might not eventually need it: Because of the process above, you can enrol to be part of the scheme at any time. If you’re not currently suffering a reduction in turnover, you aren’t yet eligible to claim. If you do forecast a reduction in turnover for a future BAS period, then you will be eligible to claim from the first JobKeeper fortnight in that period. You should lodge your claim before that fortnight commences.
• Eligibility is based on assessments of future turnover: The ATO has established all sorts of tests that allow you to establish eligibility based on ‘forward looking’ assessments of turnover. These aren’t as complex as they might first sound, and more detail is in the Guide.
• There are some important key dates you need to have in your calendar if you are claiming JobKeeper now, or want to claim in the future: You must enrol by 31 May 2020 if you want to claim for any fortnight period in April and May. 

If you enrol and have met the eligibility criteria, you’ll be required to provide a business declaration about this on a monthly basis in order to claim for JobKeeper payments. Useful information on key dates can be found here.

The below information provides more background about what you need to do if you think that future work is going to slow down, along with an outline of recent JobKeeper changes and updates.

JobKeeper might not be on your mind now, but it could be the key to your business survival if conditions worsen or recovery takes a long time.

Is forward work slowing down?

If you have enrolled for JobKeeper and face a forward work slowdown, you need to reasonably estimate when your turnover will have reduced by 30% – and make your claim from that period, once you’ve established business, and employee, eligibility (and have adequate records to prove this if needed). 

For a business to be eligible for JobKeeper, they will need to be able to prove a forecast 30% reduction in turnover or have >$100million turnover (50%)), in comparison to the same BAS period for the previous year.  It’s important to note that this is ‘forward looking’ – meaning you need to make an assessment of your forecast income for the period (either 1 month or 3 months, depending on your business). 

Various ‘alternative eligibility tests’ (‘AETs’) have been established by the ATO for businesses who do not meet this threshold, but nonetheless should be considered for the scheme. These AETs provide a different assessment for:

• Businesses who haven’t been in business for 12 months.
• Any business who acquired or disposed of any part of the business in the last 12 months.
• Businesses who restructured in the last 12 months, where the restructure has impacted turnover.
• Where the last 12 months (or quarters within) was not a true reflection of the business’ regular annual turnover.
• Any business that was impacted by the bushfires or other natural disaster.
• Any sole trader or small partnership that had been impacted by sickness or injury, effecting turnover in the last 12 months. 

If you don’t meet the standard test, speak to someone (either an Accountant, or your local Master Builders Association) to help work out whether you might be eligible under an AET.

Employee Eligibility

Once you’ve determined your business is eligible, you need to ensure you have eligibile employees. In sum, an employee will be eligible so long as they were, on 1 March 2020, employed:

• Full time
• Part time
• Casually, for at least 12 months (i.e. from at least 1 March 2019).

Record Keeping

A vital part of the JobKeeper eligibility process (establishing payments and on-going) is to make sure you have kept all necessary records to prove your eligibility. This looks different for every business – but where businesses are forecasting income based on forward work, they will need to make sure they have all records that have established the forecast income. 

Recent clarification of JobKeeper rules

One-in, All-in

The Federal Government has recently provided much needed clarity on the ‘One-in, All-in’ rule, making changes to the Rules to mandate that all eligible employees must be given the opportunity to nominate for the subsidy. It’s important for all JobKeeper eligible employers to note this. 

Other clarification of relevance

The amended rules also made the following changes relevant to BCI businesses:

• Established the new ATO ‘alternative eligibility tests’, which (amongst other things) includes establishment of a test for labour hire companies and entities with a special purpose employment vehicle whose operations have been impacted (but not necessarily through reduced turnover).
• Made it clear that the ‘one in, all in’ rule applies to all businesses. 
• Changed the way payments from the Commonwealth for services rendered are assessed for Not for Profits and Registered Charities.

For more information on JobKeeper or any other issue that’s impacting your business during COVID-19, please contact your local Master Builders office. 

Download Master Builders Detailed JobKeeper Guide