This week the government has announced extensions to both the JobKeeper and the JobSeeker payments and this really comes as no surprise. The economy is still heavily reliant on these support measures to keep it propped up.
However, both the JobKeeker and the JobSeeker payments are being wound back. Not only are the payment amounts reducing, but the eligibility requirements are getting tightened.
So today, we are going to look at these changes. Please bear in mind, these changes are only proposed at this stage and has not been legislated as yet so they may change.
JobKeeper is the payment made to eligible employers to help cover the cost of an employees wage.
Currently, the JobKeeper payment is $1,500 per fortnight and this will continue to run until the 27 September 2020. After this date, the payments will be altered in two phases.
Phase 1 will kick in from the 28 September 2020 and remain until the 3 January 2021. Under this phase, the JobKeeper payment will be reduced from $1,500 per fortnight to a maximum of $1,200 per fortnight.
Employees who work 20 hours or more on average per week will be eligible for the full $1,200 per fortnight payment. This will be measured from the 4 weeks leading up to 1 March 2020.
Employees who work less than 20 hours per week will only be eligible for a payment of $750 per fortnight.
These changes apply for both employees of a business and eligible business participants. So if you are a business owner on JobKeeper payments, then you will need to meet the same eligibility requirements and be subject to the same payment limits.
Phase 2 will kick in post the completion of Phase 1 and run from the 4 January 2021 and remain in-place until the 28 March 2021. Under this phase, the JobKeeper payment will be reduced again from $1,200 per fortnight to a maximum of $1,000 per fortnight.
The working hours test will remain in-place. So employees who work 20 hours or more on average per week will be eligible for the full $1,000 per fortnight payment. This will still be measured from the 4 weeks leading up to 1 March 2020.
Employees who work less than 20 hours per week will only be eligible for a payment of $650 per fortnight (down from $750 per fortnight in Phase 1).
Again, these changes apply for both employees of a business and eligible business participants. So if you are a business owner on JobKeeper payments, then you will need to meet the same eligibility requirements and be subject to the same payment limits.
Under both phase 1 and phase 2, the requirement of businesses to show a reduction in GST turnover will remain in-place. That is, their GST turnover must have been reduced by at least the following percentages:
- 30% for entities with aggregated turnover of $1 billion or less
- 50% for entities with aggregated turnover of more than $1 billion
- 15% for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities).
Under both Phase 1 and Phase 2, the GST turnover will be comparable each quarter to the same period the previous year.
JobSeeker is a payment made to individuals who are currently out of work but looking for a job. As a result of COVID-19 the government made some changes to JobSeeker which included making it easier for people to claim by altering the income and asset test as well as providing an additional temporary Coronavirus Supplement of $550 per fortnight on top of the standard JobSeeker payment. This takes the current maximum payments up to a potential $1,162 per fortnight.
The additional $550 per fortnight is scheduled to finish on the 24 September 2020. The government has now proposed that an additional Coronavirus Supplement will continue past this date but will be reduced to $250 per fortnight. This will see the maximum potential payments reduce up to $862 per fortnight.
The asset test limit for the JobSeeker payment is currently waived however, this will be reinstated from 25 September 2020. This means that if you have assets in excess of the following limits, you will receive a reduced payment.
In addition to an assets test, you will be subject to an income test. From the 25 September until the 31 December your payment rate will reduce by 60 cents for every dollar of income you earn above $300 per fortnight. The ability to earn the $300 per fortnight without impacting payments gives some incentive for people to enter back into the workforce and is still more favorable than the traditional income test limits.
If you have a partner that is working, they will be able to earn up to $1,165 per fortnight without impacting your JobSeeker payment. Any earnings over this amount and your payment will reduce by 27 cents for every extra $1 earned. If your partner earns over $3,086.11 per fortnight ($80,238.89 p.a.) then you will not be eligible for JobSeeker.
We have talked in the past about the looming economic cliff coming in September when the support measures were originally set to end. Now, that economic cliff has been postponed thanks to the extension of not only the JobSeeker and the JobKeeper payments but also the extension of repayment holidays on mortgages.
However, we are not out of the woods yet. These measures are still a band aid fix on the economy and they can’t last forever. We still need jobs to pick up along with consumer/business confidence so we can once again stand on our own two feet without government intervention.
The longer these support measures continue, the larger the government’s deficit grows which will likely mean a hike in future tax rates.
Having said that, I do think it was a necessary step to extend these measures. A lot of people are still struggling due to COVID-19 and need help. I do like that the government is making it harder to access support payments with increased eligibility requirements as there were a lot of people out there earning more on government support than they did by working – the economy can’t survived if people are disincentivized to work!