The ATO has cautioned taxpayers to be aware of phishing email scams in the lead up to this tax time.

These phishing emails tell recipients that their ‘2022 tax lodgement’ has been received. The email also asks recipients to open an attachment to sign a document and complete their ‘to do list details’. These emails are not from the ATO — the ATO has advised that if you do get an email like this, do not click on any links or open any attachments. The ATO advises you to forward the email to ReportEmailFraud@ato.gov.au, and then delete it.

The ATO also provides the following tips:

The real ATO will never send an email or SMS with a link to log in to their online services.

The ATO may use email or SMS to ask you to contact them, but they will never send an unsolicited message asking you to return personal identifying information through these channels.

If you think a phone call, SMS, voicemail or email claiming to be from the ATO is not genuine, do not reply to it. Instead, you should either phone the ATO on 1800 008 540 or go to Verify or report a scam to see how to spot and report a scam.

Australians are being warned to be on the lookout for scams. The ATO has become aware of a scam wherein ATO clients receive an email in their MyGov inbox. One such scam claims the recipient has an outstanding tax refund. The scam, impersonates myGov and seeks to steal  accounts details and credit card credentials.

The sender name shows “myGov – Refund Service”; however, the display address has been edited, and the sending address is a jumble of letters and numbers with a domain that has been linked to other scams.

“The email itself has been cleverly designed to appear as one you could expect to receive from myGov…although there are a few minor grammatical errors, it’s convincing enough to potentially fool many individuals.” as per below (Eliza Bavin, Yahoo Finance, 2022):

The body of the email alerts the recipient that they have an outstanding refund and, in order to “accept fast payment online”, they’re instructed to click a link. After clicking the link, the user is taken to the first phishing site, which is almost an exact replica of the myGov login page, the only immediately obvious difference being the URL. The user is directed to enter the email and password they use for their myGov account to sign in, and these details will then be harvested by the attacker. Next, the user is taken directly to a page where they’re instructed to update their information in order to receive their refund.

Note: The authentic myGov login page uses multi-factor authentication (MFA) when you sign in, meaning, on top of your password, you’ll have to answer a secret question or enter a code that’s received on your mobile. This step is skipped by the scammers.
 
On this page, the victim is asked to enter their:

• Name on the card
• Card number
• Expiration date
• CVV
• Date of birth
• Phone number

“This scam preys on the heightened emotions that tax time brings and, given the attention to detail at every stage, it has potential to be very damaging.”

MailGuard said, while myGov’s MFA process should help to limit what access a criminal may get to their victims’ personal information, you can never be too certain what they’re capable of.

“It’s especially important to ensure all of your passwords are unique, so if one were to be compromised in a situation such as this, the attacker can’t use it to access any of your other accounts.” 

The ATO is also warning young people to be wary of scammers. 
 
The Australian Taxation Office (ATO) has taken action against 595 websites impersonating its online services.
 
ATO assistant commissioner Tim Loh said the fake sites are designed to steal passwords, personal information and identity documents, such as passports and driver’s licenses. Since April 2022 the ATO has had more than 360 scams reported.

It is a myth that  only the elderly fall for scams. In the past three years, younger Australians have fallen victim to the most tax scams. In 2021, people aged 25 to 34 reported the most amount of money lost to tax scams, closely followed by those aged 18 to 24. In contrast, those aged 55 and above were among those who reported the least financial losses, the ATO said.

If you get a phone call saying it’s from the ATO and it doesn’t sound right, hang up. Check with someone you trust, like us, or go to the ATO’s website where they have a listing of all the current ATO scams. You can also call  on a dedicated scam hotline, 1800 008 540.
 
Email and SMS scams are not always full of typos, bad grammar and promises of riches from foreign royalty, Loh said. “We are seeing many more sophisticated scam messages using official language and fraudulent websites that mimic online services.”

The ATO will contact people through emails and SMS but will not request personal information through those means.

The ATO will never:

• Send an unsolicited message requesting personal information via a return email or SMS
• Send an email or SMS with a link to log in to its online services
• Ask you to pay a fee in order to receive a refund

Some common scams involve:

• Phoning people about a fake tax debt, and threatening that they’ll be arrested if they don’t pay it straight away
• Sending texts to people saying that they’re suspected of being involved in cryptocurrency tax evasion. If you receive this text, don’t click on the link
• Sending emails impersonating the ATO and asking for people to update their financial information so their tax refund can be processed

How to protect yourself from scams

MyGov offers the following advice in order to protect your account:

• Don’t share your myGov sign in details with anybody else
• Use a strong password that is easy for you to remember but hard for others to guess
• Use a different password to your other online accounts
• Change your password and myGov PIN regularly
• Don’t let other people see your computer screen when you use the ‘show password’ option
• Don’t send your password and myGov PIN to anyone by email or text message
• Don’t tell anyone your email account password
• Always sign out of your myGov account when you have finished using it

Check for the Extended Validation Certificate indicator in your browser’s address bar when accessing myGov. Each browser shows the Extended Validation Certificate in a different way. Usually this is a green box or bar with a padlock icon.

From 1 July 2022, two important super guarantee (SG) changes will apply to businesses that have employees. These are: 

• the rate of SG is increasing from 10% to 10.5%
•  the $450 per month eligibility threshold for when SG is paid is being removed.  

What this means 
 
These changes mean that from 1 July 2022, if your business has employees:

• you’ll need to make SG contributions at the new rate of 10.5% 

• employees can be eligible for SG, regardless of how much they earn. You may have to pay SG for the first time for some or all of your employees. 

The ATO are working with digital service providers (DSPs) to make sure payroll software is updated in time.
 
What you need to do
 
Check that your software is updated to correctly calculate your employees’ SG entitlement from 1 July 2022.
 
If the removal of the $450 threshold means you’ll be paying SG for one or more employees for the first time, you’ll need to give them a Standard Choice Form.
 
If your employee does not provide you with a choice of super fund, review the Stapled Super Fund information on the ATO website for guidance on what you need to do next.  A stapled super fund is an existing super account linked to an individual employee.

Commencing from the 2016 and later income years, an eligible Managed Investment Trust (MIT) may choose to apply the attribution rules in Division 276 of the Income Tax Assessment Act 1997 (ITAA 1997).

The AMIT regime was established by the Australian Government to provide a qualifying managed investment trust with an exclusive set of tax rules that replaces the existing tax rules.
 
It provides funds with improved flexibility and unitholders greater certainty in relation to their tax treatments.
 
Where that choice is made, the MIT becomes known as an Attribution Managed Investment Trust (AMIT).
 
Where you have an investment in an AMIT, and you receive a distribution, the components of the distribution will be set out in an AMIT member annual statement (AMMA Statement) that will be issued to unitholders after the end of each financial year. 
 
AMIT COST BASE INCREASE OR DECREASE AMOUNT
 
A portion of the distribution may be allocated as a “non-assessable amount”.
 
This amount is not disclosed in your tax return but is required when calculating a CGT gain or loss relating to disposal of your units in the Trust.
 
When this occurs, the cost base of your units needs to be adjusted by the amount so distributed as follows 

• where the distribution paid to you exceeds the taxable income attributed, you are required to decrease the CGT cost base of your units in the Trust by the excess
   
• where the amount distributed to you is less than the taxable income attributed to you, ie a shortfall, then the CGT cost base of your units needs to be increased by the shortfall

We suggest you keep track of these distributions each year and update your investment portfolios accordingly.

 
That way, when disposing of the units in the future, the cost base will be correctly reflected.
 
If we prepare your SMSF annual return, we update the figures each year.

Generally, when an individual makes a concessional contribution into super, they are either entitled to a tax deduction (ie personal deductible contribution) or the pre-tax income is not taxed to them personally (eg salary sacrifice), but instead taxed in the superannuation fund at a concessional rate. The concessional contributions cap essentially limits the amount of pre-tax contributions an individual can make into super.

Where an individual has exceeded their concessional contributions cap, the excess amount is included in their assessable income and taxed at their marginal tax rates (MTR).

The individual is also entitled to a 15% non-refundable tax offset to compensate for the tax paid by the superannuation fund on the same excess contribution.

Due to timing differences of when tax liabilities become payable, there could be some

advantage for people who breach their concessional contributions cap, as the tax liability on excess contributions is paid later than if the member had not made an excess contribution and instead paid PAYG tax on their income. To neutralise these benefits, an ‘excess concessional contributions charge’ is imposed on individuals who have excess concessional contributions in a particular financial year. See ‘Excess concessional contributions charge’ below for further details.

Members can elect to have up to 85% of their excess concessional contributions released from super. 

Example:

Frank (subject to a MTR of 34.5%) makes excess concessional contributions of $20,000. Firstly, these contributions will be assessable income of his super fund and be taxed at up to 15% ($3,000). Secondly, $20,000 will be added to Frank’s assessable income for the financial year ($6,900) but he will receive a 15% tax offset ($3,000). Frank’s excess concessional contributions have effectively been subject to a maximum of 34.5% (his MTR). This excludes any excess concessional contributions interest charge that may be payable.

Excess concessional contributions charge

Under the new rules, an ‘excess concessional contributions’ charge applies. This charge (essentially an interest charge) recognises the fact that a client making excess concessional contributions can avoid these amounts being taken into account under the PAYG rules and therefore pay tax later than would otherwise be the case.

The charge:

• is payable with reference to the amount of a client’s income tax liability for the financial year that is attributable to excess concessional contributions.

• is calculated from the start of the financial year in which the excess contributions are made until the day payment is due under the client’s first notice of assessment for that financial year

• is calculated and compounded daily at a rate equal to the RBA-published 90 day bank accepted bill rate plus 3%
   
• becomes payable when the client is liable to pay income tax attributable to the excess concessional contributions. 

Example:

Joanne exceeded her concessional contribution cap by $10,000 in the 2019-20 financial year. She is on marginal tax rate of 37% plus 2% Medicare levy.

The excess concessional contribution charge is applied on the following tax liability: tax assessed on excess CC: $3,900 ($10,000 x 39%) less tax offset on excess: $1,500 ($10,000 x 15%).The ECC charge is applied on the amount of tax liability of $2,400. If the applicable Shortfall Interest Charge rate is 4.54%, this is equal to 0.01243836% per day.

The ECC charge would be (1.0001243836n – 1) x $2,400, where n is the number of days. For a period of 30 days, for example, the ECC charge on $2,400 would be approximately $8.97. The ECC charge is calculated by the ATO and is paid from the start of the financial year until first income tax assessment is due. The shortfall interest charge is then payable from that date until the date the extra income tax liability (as result of the excess concessional contribution) is due.

Shortfall interest charge

When there has been as excess concessional contribution, the member’s tax return may be amended to include the excess contribution (and applicable 15% tax offset). As a result, the tax liability may be increased. The ATO applies interest to this shortfall amount for the period between when it would originally have been due and when the assessment is corrected.

Taxpayers are usually unaware of a shortfall amount until they receive an amended assessment, so the ATO applies a lower-rate interest called shortfall interest charge (SIC). The SIC is then payable from the date of the first income tax assessment until the date the extra income tax liability (as a result of the excess concessional contribution) is due.

General interest charge

If an amount of ECC charge and shortfall interest charge remains unpaid after the time it is due, the individual will also be liable to pay the general interest charge (GIC) on the unpaid amount for each day in the period from when the amount was due until it is paid. Refer to the ATO website for current GIC rates. As a guide, the annual GIC rate for the July to September quarter of the 2019-20 financial year is 8.54%.

Administration of excess concessional contributions

The ATO will issue an individual who has exceeded their concessional contributions cap with an excess concessional contributions determination. Together with the determination, the ATO will issue an income tax return Notice of assessment/Notice of amended assessment to advise the individual that their excess amount has been included as assessable income in their tax return.

Individuals should check that the information on the determination is correct. The ATO makes assessments and determinations based on information provided by superannuation funds and the individual’s tax return. There is a possibility that the individual’s super fund has incorrectly reported the contribution. If there has been a mistake, the super fund can re-report the contribution to the ATO. A fund can’t re-report contributions simply to assist its member to avoid exceeding one or more contributions caps.

If there’s no error in the ATO’s excess concessional contributions determination, the individual should pay the tax liability as stated in the determination using their own money. However, they have the option to elect to release up to 85% of the excess amount from their superannuation fund to pay the tax. It is important to note that excess concessional contributions (excluding the grossed up amount of those that are released) count toward an individual’s non-concessional contributions cap.

Electing to release excess concessional contributions

Individuals may elect to have up to 85% of any excess concessional contributions made from 1 July 2013 released from their super fund. This may be necessary, for example, to allow the individual to have enough funds available to pay income tax on their excess concessional contributions.

An individual must make such an election to the ATO through their MyGov account within 60 days from when an excess concessional contributions determination or an amended determination is issued. The request must specify a valid release amount (up to 85% of the excess concessional contributions amount) and identify the superannuation interests from which it is to be released. Once made, an individual is not able to revoke an election to release excess concessional contributions. 

Once an individual has made an election, the ATO will issue a release authority to the member’s super fund. The superannuation provider has 10 business days from the date of issue of the release authority to release this amount to the ATO, unless a further period had been allowed by the ATO.

Excess concessional contributions released to the ATO are applied as a credit against the individual’s tax liabilities. To the extent the released amount exceeds the individual’s liabilities, it is refunded to the individual. The individual may be entitled to the payment of interest if there is an unreasonable delay between the ATO receiving the released amount and the payment of any refund to the individual.

In June 2020, the Federal Government passed legislation intended to improve the integrity of Australian business registers and create a central Commonwealth Business Registry.

A key element of this program was to introduce the requirement for all Directors to acquire a unique Director Identification Number (DIN).  

The Director ID regime is intended to prevent illegal ‘phoenixing’ activities and increase Director accountability and traceability, while also preventing the use of false or fictitious identities, such as Elvis Presley or Bob Marley.

DIN’s will be recorded in a new database to be administered and operated by the Australian Tax Office and be made available to the public.

 While existing directors will have a year to apply for their director ID, new directors appointed between 1 November 2021 and 4 April 2022 will have just 28 days after appointment to apply for their director ID. New directors who are appointed from 5 April 2022 will be required to apply for their director ID before appointment. 

Applications for a director ID are free and will open next month on the newly established Australian Business Registry Services (ABRS), a single platform administered by the Commissioner of Taxation that brings together ASIC’s 31 business registers and the Australian Business Register.

Directors must apply for their director ID themselves, and will be required to produce their myGovID alongside two identity documents from a list including their bank account details, super account details, ATO notice of assessment, dividend statement, Centrelink payment summary, and PAYG payment summary.

Applications for a director ID commences in November 2021.

To find out more about the director ID regime see the links below.

• About director ID
• Who needs to apply and when
• How to apply for your director ID
• Verify your identity
• Manage your director ID

Under the law, directors who fail to apply for a director ID within the stipulated time frame can face criminal or civil penalties of 5,000 penalty units, which currently stands at $1.11 million.
 
Penalties will also apply for conduct that undermines the new requirements, including providing false identity information to the registrar or intentionally applying for multiple director IDs.

The director ID will be attached to a director permanently, even if they cease to be a director, change their name, or move interstate or overseas.

The Australian Taxation Office (ATO) is reminding the community that the temporary shortcut method is available to those claiming working from home deductions this year.

The temporary shortcut method was created at the height of the pandemic last year to respond to the sudden influx of makeshift home workspaces.

Assistant Commissioner Tim Loh said that “even with people shifting back to the office, we know many Australians have opted to continue working from home at least one day a week.”

The working from home shortcut method allows claims at the all-inclusive rate of 80 cents per hour, rather than needing to do complex calculations for specific items.

“The shortcut method is straight forward; just multiply the hours worked at home by 80 cents,” Mr Loh said.

“The only proof you need is a record of the number of hours you’ve worked from home, such as a timesheet.”

The temporary shortcut method can be claimed by multiple people living under the same roof and, unlike existing methods, does not require a dedicated work area.

The shortcut is all-inclusive. You can’t claim the shortcut and then claim for individual expenses such as telephone and internet costs and the decline in value of new office furniture or a laptop.

Taxpayers can still claim under the existing arrangements if they choose.

“If you decide to go with an existing method, I would encourage you to do your research and keep good records. Keeping track of each individual expense and calculating the work-related use of each one can be fiddly so be organised. So, make sure you’ve read the guidance on our website or chat to your registered tax agent”, Mr Loh said.

Top 4 no-go expenses

If you chose to claim your working from home expenses through the fixed rate or actual cost methods, remember you still can’t claim:

• Personal expenses like coffee, tea and toilet paper. While they might normally be supplied by your employer, they still aren’t directly related to earning your income.
• Expenses related to your child’s education, such as online learning courses or laptops
• large expenses up-front. Any asset that costs over $300 (either in total or per item), such as a computer, can’t be claimed immediately. Instead, these claims should be spread out over a number of years
• Employees generally can’t claim occupancy expenses such as rent, mortgage interest, property insurance, land taxes and rates. Working from home does not mean your home is a place of business for tax purposes. If you claim occupancy expenses, you may have to pay capital gains tax when you sell your home, even if it is your main residence.

Three different methods for 2020–21

You can choose one of three ways to calculate your additional running expenses for this tax time:

• claim a rate of 80 cents per work hour at home for all your working from home expenses; 
• claim a rate of 52 cents per work hour at home for the heating, cooling, lighting and cleaning of your dedicated work area and the decline in value of office furniture and furnishings. Then calculate the work-related portion of your telephone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device.
• claim the actual work-related portion of all your running expenses, which needs to be calculated on a reasonable basis.

Remember, to claim any work-related expense, you must have spent the money yourself and not been reimbursed, the expense must be directly related to earning income (not a private expense), and you must have kept any necessary records (a receipt is best).

We will discuss the above with you when preparing your 2021 tax return.

Super guarantee changes

On 1 July 2021, the superannuation guarantee rate will increase from 9.5% to 10%.

Those affected will need to ensure that payroll and accounting systems are updated to reflect this change.

The rate is scheduled to progressively increase to 12% by July 2025.

Concessional and non-concessional caps

From 1 July 2021, the superannuation concessional and non-concessional contribution caps will be indexed. 

The caps for concessional and non-concessional contributions will both increase by 10% from 1 July 2021 (for the 2021/22 financial year onwards). The new caps will be:

The total superannuation balance limit that determines if an individual has a non-concessional contributions cap of nil will also increase from $1.6 to $1.7 million, effective from 1 July 2021.

Individuals who are under 65 years old, may be able to make non-concessional contributions of up to three times the annual non-concessional contributions cap ($110,000 from 1 July 2021) in a single year. It is important to note that if an individual enters into a bring forward arrangement before 1 July 2021, they will not have access to any additional cap space as a result of the increase to the non-concessional cap.

From 1 July 2020, the recent change in legislation has allowed making contributions to super easier for anyone aged 65 or 66 years of age as there now is no requirement to meet the work test. But once an individual reaches 67 years of age, the work test must be met prior to the contribution being made.

What is the work test and how does it work?

The work test requires a person to be gainfully employed for at least 40 hours in 30 consecutive days during the financial year before concessional or non-concessional contributions can be made after reaching the age of 67.

Being gainfully employed means that a person must be engaged in paid work in an occupation. This includes being employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment. ‘Gain’ or ‘reward’ includes receiving wages, business income, bonuses and commissions or other income from the employment or self-employment.

A person engaged as a volunteer is not considered to be in gainful employment as they are not paid for the work undertaken. Even if a volunteer receives reimbursement of expenses or allowances for meals while undertaking the work as a volunteer, they are not considered to be gainfully employed.

It can be complicated to determine whether a person is engaged as an employee. Examples could include someone who is babysitting, cleaning, lawnmowing or gardening, mainly on a casual basis. However, to be considered an employee, the arrangement must be more than just a domestic or family arrangement.

For an individual to be in a genuine employment arrangement, the person’s employer would need to make payments which are taxable and tax is deducted from the payment, if required. Also, the employer may be required to meet their superannuation guarantee obligations, workplace health and safety requirements, arrange insurance and worker’s compensation and ensure that all employee entitlements are provided. This needs to be backed up with relevant business records and that contracts and employment agreements in place.

A person who is 67 years of and under the age of 75 may wish to make deductible and non-deductible personal super contributions. However, they are required to meet the work test in most situations. If an individual intends to claim a tax deduction, they are required to complete a notice of intent which must be lodged with the super fund and acknowledged in writing by the fund’s trustee.

There are two exceptions that apply to personal super contributions where the work test is not required to be met. The first applies on a once only basis for the financial year after a person has ceased work and their total super balance for that year is less than $300,000. The second is for anyone who qualifies for the downsizer contribution as it can be made at any time after they have reached the age of 65.

Good news about the bring forward rule

A proposed change to the legislation that we have been waiting for is the extension of the bring forward rule for non-concessional contributions from age 65 to age 67. This amendment is currently before parliament. Currently, the bring forward rule allows a person to bring forward up to two years of non-concessional contributions commencing in the year in which they make non-concessional contributions that is greater than the $100,000 annual cap. Where a person has a total super balance of less than $1.4 million, they can bring forward two years of non-concessional contributions. This allows a total of $300,000 to be made at any time during a fixed three-year period. If the person has a total super balance of between $1.4 and $1.5 million, they can bring forward one year of non-concessional contribution. This allows a total of $200,000 to be made at any time during a fixed two-year period.

The amendments to the bring forward rule were intended to commence from 1 July 2020. However, the legislation has been delayed as parliament has not been able to sit on a regular basis for most of this year due to the COVID-19 pandemic. The good news is that these amendments which were introduced into the parliament in May this year were debated in the House of Representatives on 25 August.

The debate seems to have bipartisan support among the major parties which is a positive sign and will be voted on by the House of Representatives before it progresses to the Senate for debate. The hope is for the amendment to receive a clear passage through both houses and not be referred to the committee stage prior to being considered by the Senate.

The only issues arising from the potential passing of the legislation is the date of effect and whether transitional arrangements will be put in place for those who may not have been able to access the bring forward rule. This would apply to anyone who was not able to make non-concessional contributions greater than the standard amount prior to reaching the age of 67 and will not meet the work test in this financial year.

What Next?

The extension of the work test exemptions to 67 years of age for personal superannuation contributions has been a bonus in these difficult times. However, we wait in anticipation to see whether the extension of the bring forward rule to the age of 67 will become law in the foreseeable future.

The second JobKeeper extension period started on 4 January 2021 and covers the JobKeeper fortnights from 4 January 2021 to 28 March 2021.  It’s timely for each business to assess their eligibility.   

Decline in Turnover Test

In order to qualify for the second extension period an entity will need to satisfy a new actual decline in turnover test.

The testing period under the decline in turnover test for this second extension period is the quarter ended 31 December 2020.

To be eligible, the actual GST turnover must have declined by the required percentage relative to the same quarter in 2019. It is possible to satisfy the decline in turnover test for the second extension period and become eligible to receive JobKeeper payments in extension period 2 even where the decline in turnover test for the first extension period was not satisfied.  Any entities enrolling in JobKeeper for the first time will need to complete the online enrolment and confirm they have satisfied the decline in turnover test by 31^st January 2021.

The required percentages remain the same as under the original JobKeeper scheme and the first extension period test being 50% for entities with an “aggregated turnover” over $1 billion, 30% for entities with an aggregated turnover of up to $1 billion and 15% for ACNC registered charities.

It is important to note that regardless of whether an entity reports for GST on a monthly, quarterly or annual basis, the test period for the second extension period is the quarter ended 31 December 2020.

In order to claim JobKeeper for the second extension period an entity must confirm that the actual decline in turnover test has been satisfied. Where the entity is registered for GST the information is prefilled from the Business Activity Statements lodged with the ATO.  It is therefore essential that activity statements for the December 2020 quarter are lodged in a timely manner.

Alternative Turnover Tests

Alternative Decline in Turnover Test rules continue to be available in some circumstances. There are seven classes of entities that are eligible to apply an alternative test relevant to their circumstances. Those classes of entities are: 

• New businesses
• Businesses which experienced a substantial increase in turnover prior to 1 March 2020
• Businesses with irregular turnover
• Businesses affected by drought or natural disaster
• Businesses where an acquisition or disposal substantially changed the turnover
• Businesses which have undergone a restructure which changed the turnover
• Sole traders or small partnerships with sickness, injury or leave

The alternative test provided for each class of entity allows that entity to compare its current GST turnover with an appropriate turnover test period which is not the corresponding period in the 2019 year. The appropriate turnover test period for use by each class of eligible entity is specified in the rules.

Where an entity applies an alternative test in order to satisfy the actual decline in turnover test the ATO must be notified that an alternative test has been used.

Eligible Employees and Eligible Business Participants

There have been no changes to the eligibility criteria for business participants. An eligible business participant of a partnership, trust or company is an individual who is “actively engaged” in the operation of the business and is not an employee of the business. There can only be one eligible business participant for each entity. An eligible business participant must be one of the following:  

• An individual partner in the partnership
• An adult beneficiary of the trust
• A shareholder or a director of a company

Both eligible employees and eligible business participants must be: 

• At least 18 years old. An individual who is 16 or 17 can qualify if they’re independent and not studying full time
• An Australian resident or the holder of a Subclass 444 visa
• Not receiving government parental leave or Dad and Partner Pay
• Not receiving payments under workers compensation law in respect of total incapacity to work
• Not a nominated employee of another business

Two Payment Tiers

A two-tiered system continues to apply with the rate of JobKeeper received being based on the average number of hours and eligible employee worked, or an eligible business participant was “actively engaged” in the business during a four week reference period. The reference period is the four weeks ending at the conclusion of the most recent pay cycle that ended on or before 1 March 2020 or 1 July 2020. The tier 1 rate will apply to eligible employees who worked for 80 hours or more during either reference period and employers must choose the most beneficial reference period for each employee.

Eligible business participants have a single reference period which is the month of February 2020. In order to be eligible for the tier 1 rate, eligible business participants must have been actively engaged in the business for more than 80 hours during February and must provide a declaration to that effect.

The payment rates for the second JobKeeper extension period are:

Tier 1         $1,000 per fortnight
Tier 2         $650 per fortnight

The ability to apply an alternative reference period continues in situations where: 

• The reference period is not representative of the hours in a typical 28 day period
• An employee was not employed or a business participant was not in business during part of the reference period
• An employee was employed before 1 March or 1 July but the first pay cycle ended after 1 March or 1 July
• The business changed hands during the reference period, or
• An entity conducted a business in a declared drought zone or declared natural disaster zone during February 2020

Employers will need to determine whether the tier 1 or tier 2 rate applies to each eligible employee and notify both the ATO and the employees which payment rate applies. Employers will need to ensure that each eligible employee continues to be paid, at a minimum, the applicable JobKeeper amount for the nominated payment tier. For the JobKeeper fortnight ended 17 January 2021 this condition will be satisfied where the payment is made to the employee by 31 January 2021.

The identification and notification of the applicable payment tier for each employee is only made once. For any business that was eligible to receive JobKeeper in relation to the first extension period, the notifications made during that period continue to apply. For any businesses enrolling for the first time under the two-tiered payment system, the entity will not be eligible to receive JobKeeper payments until valid notifications have been made in respect of all eligible employees.

JobKeeper Fortnight 20 (ended 3 January 2021)

While the general rule is that a monthly business declaration must be lodged following the end of each month to claim JobKeeper payments in respect of fortnights that ended during that month, the fortnight ended 3 January 2021 forms part of the monthly reporting for December 2020. This is because the payment rates for this fortnight are the higher rates which applied for the first JobKeeper extension period being $1,200 per fortnight for those entitled to the tier 1 rate and $750 per fortnight for those entitled to the lower tier 2 rate.