JobKeeper: the story so far (and 5 important predictions)

Author: Tony Rule, Partner, TAG Financial Services

We are now three months into JobKeeper and (at the moment) there are three months left to run. 

The story so far….

JobKeeper has been a success.  Not perfect, but good enough to get us through to this point.  Many employers were given the confidence to maintain employment for much of their team and this has kept the wheels of the economy in most sectors turning.  And whilst we don’t know at this stage whether we are through the worst of things or not, there are some actions on the horizon that look likely to meet us head on early in the new financial year.

JobKeeper has been an effective, albeit blunt tool.  A flat dollar figure for (almost) all of your employees for all businesses that suffered a loss in sales of at least 30%.  And once you were in, you were in for six months – there are no re-testing requirements.  The scheme was designed in a matter of days and announcements proceeded the detail as the plan was rolled out.  And that is fine – the Government had to do something effective and quickly.

The Government promised that the scheme would be reviewed in July.  There are a number of changes that could (and probably will) be made when that review is complete.  Here are five most likely announcements…

1. Big Brother

Every month the businesses participating in JobKeeper are providing this and next month sales figures.  The Government is watching and can very quickly identify who has needed JobKeeper for only one month and who has needed it for an extended period of time.  Those businesses that no longer qualify for JobKeeper (by virtue of improved sales) may find themselves being legislated out of the scheme for the remainder of the six month period by simply being re-tested.

Clearly, business owners would be up in arms.  But the Government would argue that the whole purpose of JobKeeper was to keep businesses going to maintain employment, not to improve the profitability of businesses that only suffered a temporary setback.  The revenue figures being provided each month will quickly show which businesses need the support and which businesses are OK.

2. Money for Nothing

There will also be a focus on how much individual employees have been receiving under JobKeeper compared to their pre-COVID-19 position.  Every second employer has stories of employees that were on $750  per fortnight who are now receiving the full $1,500 per fortnight.  Employers are still submitting payroll via STP and the ATO can very quickly analyse employees by tax file number to compare income levels.  The next logical step would be to introduce income bands (say $0 – $499 first, then $500 – $999, followed by $1,000 to $1,499 and then $1,500 plus) and depending on which band an employee was in for the six months prior to COVID-19, that income band will determine their pay for the remainder of the JobKeeper period.

3. Audit Season

The ATO have been very quick to commence audits on employers that may have incorrectly claimed JobKeeper.  And if you have any doubts about whether the ATO are serious about their audits, you only have to look at a recent high profile case where the Australian Federal Police were rolled in to help investigate whether a manufacturer had deliberately suppressed its monthly revenue in order to qualify for JobKeeper.  This sends a very clear message to business owners and directors that inappropriate claims will not be tolerated and will be aggressively pursued.

And there are no shortage of opportunities – there have been more that 3,300 “dob ins” in relation to companies inappropriately claiming JobKeeper.  Some of these “dob ins” will be fictious claims designed to cause trouble for a current or ex-employer by a disgruntled employee, but you can expect that every company on that list will be reviewed and will face some tricky questions.  Employers need to make sure that they are ready for the “knock on the door” – do not be trying to put together your supporting file while the ATO are parking their car in your car park. 

As Elmer Fudd would say – “it’s Audit Season!”  And it will be for some time to come.

4. Different Strokes

Each industry has been impacted differently by the pandemic.  Some businesses went into “hibernation” overnight.  Some project-based businesses have been operating at 110% trying to get jobs finished before sites get shut down.  JobKeeper has benefited those business that suffered a downturn quickly, but will give nothing to the businesses that are still to fall into their trough. 

Expect more announcements in relation to specific industries (such as the recent HomeBuilder scheme – a $25,000 grant towards a new home or significant renovations) designed to keep participants in specific industries employed.

5. Don’t Stop Me Now

Given the discovery of an extra $60 billion that has not been spent on JobKeeper (it was going to cost us $130 billion, but now it is only $70 billion) there is scope to extend this program.  Businesses would need to re-apply for assistance, but with more time this could be arranged in a more appropriate fashion, such as phasing in the assistance.  Instead of businesses needing to “achieve” a 30% drop in revenue to participate in the scheme, a graduated scale could be used to determine the level of assistance towards covering costs (including wages).  This would ensure that the businesses with a lag in their decline in revenue can be assisted when they need it too.

Tough Times

Regardless of whether some or all of these ideas get implemented by the Government, the message to business owners is clear.  We are living in tough times and your old strategy for your business may no longer get you through.  Improved reporting around budgets and KPI’s for most businesses will be a must.  But more important will be making sure that you have the right strategy for your industry and your niche in that industry.


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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2020. Please do not reproduce without the expressed written consent of the author.