Insight

New JobKeeper rate and what this means for independent schools

This week Prime Minister Scott Morrison and Treasurer Josh Frydenberg revealed the future of JobKeeper and JobSeeker amid concerns the economy could fall off a cliff once the programs end.

JobKeeper is estimated to have kept 3.5 million Australians in work in around 960,000 businesses.

As promised, the Government has conducted a review of JobKeeper, which found it is doing its job and has been well targeted in stemming the loss of businesses and jobs. Reports this week have revealed that many independent schools have already accessed JobKeeper, with Grant Thornton assisting with determining eligibility for a number of these schools. At least one quarter of Victoria's 219 independent schools are receiving the $1500 per fortnight subsidy, The Australian Tax Office has noted.

The review recommended keeping support measures in place as we face continued economic uncertainty, with JobKeeper extended for an additional 6 months to 28 March 2021 at a cost of approximately $16b. The extension allows businesses time to make plans and address cash flow with the aim of phasing JobKeeper out entirely.

Importantly, all current arrangements will run to 28 September 2020.

Is your school eligible for JobKeeper?

Whilst ACNC registered charities may elect to exclude government grants/revenue from the turnover test, this election is not available to universities and non-government schools. Therefore, many schools have assumed that they will not be eligible for JobKeeper payments on the basis of the level of government revenue that is expected to be received.

However, in line with the entire education sector, the operating environment of many non-government schools has been significantly impacted and this has severely restricted the ability to provide education to students. Further, as a result of having been forced into remote learning, a large part of the planned curriculum and extracurricular activities have not been offered. We are seeing a number of factors that may mean the 30% decline in turnover will be met, including:

  • waivers/discounts or extension of payment terms offered to affected families that are experiencing financial hardship;
  • loss of external rental activities (i.e. of gymnasiums, pools and other school facilities);
  • a decline in sports and subject levies;
  • a decline in boarding fees and tuition fees from international students;
  • reduced tuckshop and uniform sales; and
  • reduced donations from benefactors.

JobKeeper 2.0 – targeted, tiered and temporary

The first phase of JobKeeper was designed to get money out to businesses as quickly as possible. An unintended consequence of this was some employees being paid more on JobKeeper than they had been before COVID. Businesses were also able to access JobKeeper if they satisfied the turnover test at any point during COVID, however going forward, there will be much greater scrutiny on changes in revenue. In particular:

  • The current turnover test will be substantially tightened for each quarter.
  • To qualify for the December 2020 JobKeeper, businesses must meet the decline in turnover test for each of the June and September 2020 quarters.
  • To qualify for the March 2021, JobKeeper, businesses must meet the decline in turnover test for each of the June, September and Decembers 2020 quarters.
  • The flat $1,500 payments will be replaced by a new two-tiered payment system to reflect the pre-COVID working hours of employees.
  20+ hours a week <20 hours a week
Until 27 September 2020 $1,500 a fortnight $1,500 a fortnight
From 28 September 2020 $1,200 a fortnight $750 a fortnight
From 4 January 2020 $1,000 a fortnight $650 a fortnight

 

The JobKeeper payment will remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period.

It is important to note that employers eligible under the current JobKeeper program may not necessarily be eligible under the extended program due to the tighter turnover requirements.

To find out how Grant Thornton can support your school with respect to confirming eligibility for the JobKeeper payments, please get in touch with one of our specialists below. At any time you can go to our JobKeeper hub for up to date information and insight about the JobKeeper program. This includes information in relation to our JobKeeper Assurance health check.

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