Client Newsletter – September 2020

JobKeeper rules, conditions and payment rates have changed

Legislation has been put in place to extend the JobKeeper scheme beyond its original sunset date, although the rates of payment and certain other details have been altered. The scheme is now to run until March next year, with one version lasting until 3 January and another version in place from then until 28 March.

Businesses that have been enrolled in JobKeeper do not need to re-enrol to participate in the extended scheme, but the decline in turnover test has now changed from projected GST turnover to actual GST turnover. The decline in turnover percentage remains unchanged at 30% (or 15% for not-for-profits and 50% for entities with more than $1 billion aggregated turnover).

Businesses will need to re-test their eligibility with reference to their actual turnover in the September quarter 2020 to be eligible for JobKeeper fortnights 14 to 20 (28 September 2020 to 3 January 2021). Businesses are generally expected to assess eligibility based on details reported in their BAS, with alternative arrangements put in place for businesses that are not required to lodge a BAS.

Worth noting however is that as the deadline to lodge a BAS for the September quarter or month is in late October, and the December quarter or month BAS deadline is in late January for monthly lodgers or late February for quarterly lodgers (or later under tax agent extensions), businesses will need to assess their eligibility for JobKeeper in advance of the BAS deadline. This may indeed put a great deal of pressure on businesses to complete their turnover results for the September 2020 quarter, but rest assured we are here to help.

Businesses will need to retest their eligibility with reference to their actual turnover in the December quarter 2020 to be eligible for JobKeeper fortnights 21 to 26 (4 January 2021 to 28 March 2021).

As with the first version of JobKeeper, the ATO will have discretion to set out alternative tests that would establish eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019. The wage condition, based on the tier into which the eligible employee or business participant falls (see below), will continue to be required.

For JobKeeper fortnights 14 and 15, the ATO has extended until 31 October 2020 the time a business has to pay employees in order to meet the wage condition, so that they have time to first confirm their eligibility for the JobKeeper payment. And note that businesses that did not previously join the original JobKeeper scheme can join the new version of JobKeeper if they meet the eligibility criteria.

The new JobKeeper is a two-tiered payment arrangement based on average hours worked, on an employee-by-employee basis, in the four weeks of pay periods before either 1 March 2020 or 1 July 2020. The payment tiers will be:

  20 hours or more Less than 20 hours
JobKeeper fortnights 14 to 20 $1,200 $750
JobKeeper fortnights 21 to 26 $1,000 $650

The period with the higher number of hours worked is to be used for employees with 1 March 2020 eligibility.

Payments for eligible business participants will be based on the same two-tiered payment arrangement, however the hours of active engagement to determine the payment rate will be based on the month of February 2020 only.

Businesses will be required to nominate which payment rate they are claiming for each of their eligible employees (or business participants). Employers must notify eligible employees of the payment to which they are eligible within seven days of notifying the ATO.

The ATO will have discretion to set out alternative tests where an employee or business participant’s hours were not “usual” during the February and/or June 2020 reference periods. For example, this will include where the employee was on leave, volunteering during the bushfires, or not employed for all or part of February or June 2020.

Other eligibility criteria for employees and eligible business participants will be consistent with the first version of the JobKeeper rules, bearing in mind the “1 July 2020” amendments (about eligible employees).

New data matching programs initiated by Federal Government

Over the first quarter of this financial year, the government has initiated two new data matching programs, using data that the ATO holds.

Data matching involves bringing together data from different sources and comparing it. For example, records from different agencies or businesses are compared, with the results possibly identifying people who are being paid benefits to which they may not be entitled, or people who may not be paying the right amount of tax.

For the ATO’s part, it can collect data from financial institutions or other agencies and match this with its own information, which is sourced from income tax returns, activity statements and other tax records. In the past, data matching activities have focused on, for example:

– the total credit and debit card payments received by businesses

– information on sellers using online selling platforms

– details of payments made to ride-sourcing drivers from accounts held by the ride-sourcing facilitator.

The ATO then matches this data with information held in its databases to identify any discrepancies.

This time however, the focus is to be on data held by Services Australia (the government body that became the executive agency in February this year in the Social Services portfolio responsible for health, social and welfare payments and services — known by most as Centrelink).

Of the two new programs, one will be looking specifically at comparing information held by the ATO in relation to the JobKeeper payment and information reported to Services Australia’s “customers” in relation to social security payments.

The aim, as described in the notice announcing the program, is to uncover people who may be registered for both the JobKeeper program and social security payments, and “identify social security customers who may need extra support to correctly declare their income, to help prevent them getting an overpayment”.

A “protocol document” describing the program was developed in consultation with the Office of the Australian Information Commissioner, where it is stated: “This program involves the agency receiving a data file from the ATO which will contain a list of all employees who have been nominated for JobKeeper payment by an eligible employer. The agency will then undertake a matching process of this data against the agency’s social security payment customers and claimants.”

It says the matching process compares the following fields of data of each payee:

– tax file number

– family name

– given name

– additional name (other name)

– date of birth.

The other exchange of data involves comparing information held by the ATO in relation to Single Touch Payroll (STP) and Services Australia’s databases. The aim this time is to enable:

– comparison of pre-filling employer details (as reported through STP) onto Services Australia online services for review by customers,

– the supporting of timely confirmation of employment and establishment of child support employer withholdings (where appropriate),

– the identifying where there is a significant difference between STP income and the estimate the customer has provided to Services Australia, and nudging the customer to suggest that they revisit their income estimate,

– the supporting of existing debt recovery processes, including the contacting of customers with whom contact has been lost,

– analysis of the data with a view to improving Service Australia’s processes.

Again a protocol document describing the program was provided, which states that the data matching program “will exchange personal information and employer/employee relationship and payroll data between Services Australia and the ATO where there is a mutual relationship for the individual”.

It says part of the objectives of the exercise is to:

ATO advice, if anyone thinks they’ve made a mistake or left something out, is to contact either the ATO or their registered tax adviser to correct the mistake or to amend any previously supplied data. “You can also make a voluntary disclosure – we may reduce or even waive penalties if you make a disclosure before we contact you,” it says.

SMEs: ATO confirms JobKeeper payments do not contribute to aggregated turnover

From the outset, it has been emphasised that JobKeeper payments are assessable income. However some concerns had been raised as to JobKeeper payment status in regard to being statutory income or ordinary income. And if the latter, whether it is ordinary income derived in the ordinary course of carrying on a business.

If so, JobKeeper payments would be included in aggregated turnover, which determines whether an entity qualifies for a range of concessions and other certain measures, which can include accessing the small business income tax concessions, small business CGT concessions, the instant asset write-off, the refundable R&D tax offset, and the base rate entity tax rate.

But now the ATO has confirmed that although JobKeeper payments are ordinary income, they are not derived in the ordinary course of business, and therefore not included in aggregated turnover.

Electronic execution of documents during COVID-19

The COVID-19 pandemic has prompted state and territory governments to temporarily ease the manner in which documents are executed.

It is now possible under multiple jurisdictions to sign and witness certain documents electronically or via audio visual links. The changes address difficulties in executing documents amid social distancing and stay-at-home restrictions. However the requirements for signing and witnessing documents are highly prescriptive and specific to each state and territory, and you may need to seek legal advice as required depending on your individual situation.


Federal legislation and similar legislation in each state and territory provides that electronic signatures are able to be used to validly sign most contracts. While specific requirements in each state and territory vary, a valid electronic signature must usually satisfy three broad requirements:

– Identification: a recipient must be able to identify the person signing the contract and confirm their intention to be bound by it.

– Reliability: the method used to sign the document must be reliable. This is determined by considering all relevant circumstances and the purpose for which the electronic signature is required.

– Consent: the recipient must consent to the document being signed electronically.

Note that there are state and territory-specific exemptions (such as in relation to certain property transactions) and you may need to seek legal advice depending on your particular situation.

Deeds, statutory declarations and affidavits


The Victorian Government introduced special regulations specific to the COVID-19 pandemic. The Victorian regulations are highly prescriptive in relation to witnessing, signing and the use of video links for certain documents.

These regulations are due to expire on 24 October 2020, and at the time of writing the state government was yet to announce whether they will be extended.

Key changes regarding the remote execution of deeds, powers of attorney, wills, affidavits and statutory declarations include:

– deeds can now be signed electronically in accordance with the requirements of the Electronic Transactions (Victoria) Act 2000, subject to other legislative requirements

– in relation to transactions that are governed by the Electronic Transactions (Victoria) Act 2000:

    • witnessing signatures by audio visual link is now permitted, subject to the witness writing a statement that they observed the signing by audio visual link
    • signatures are now valid across separate copies of documents
  • declaring a statutory declaration is now permitted by audio visual link for the purposes of the Oaths and Affirmations Act 2018.

New South Wales and the ACT

The NSW Government introduced regulations this year that permit the witnessing and signing of documents via audio visual links. Relevant documents include deeds, statutory declarations, wills, powers of attorney and affidavits.

Similarly in the ACT, amended regulations also allows the witnessing of documents by audio visual link – namely affidavits, wills and general or enduring powers of attorney.

These laws state that the relevant documents can be witnessed via audio visual link if the witness, in summary:

– observes the person signing in real time

– confirms the signature was witnessed by signing the document or a copy of the document

– is reasonably satisfied the document that the witness signs is the same document (or a copy of the document), signed by the signatory, and

– endorses the document (or a copy of that document) by writing a statement specifying the method used to witness the signing in accordance with the particular legislation.


The Queensland Government introduced new legislation and amended existing regulations to broadly allow deeds to be converted into electronic documents and electronically signed. Subject to complying with the requirements of the Queensland regulations, certain deeds no longer need to be witnessed.

Further, the new rules provide for the ability for affidavits, declarations and powers of attorney to be witnessed by audio visual link.


Limited witnessing of documents (including statutory declarations) is now permitted via audio visual link pursuant to new legislation introduced this year. The witness must, in summary:

– observe the person signing in real time

– confirm the signature was witnessed by signing the document (or a copy)

– be reasonably satisfied the document the witness signs is the same document (or a copy of that document), signed by the signatory, and

    • endorse the document (or a copy) by stating the signing was in accordance with the legislation.

Western Australia, South Australia and the Northern Territory

The Western and South Australian governments (save as noted below) and the Northern Territory have enacted little or no legislation prescribing remote witnessing and electronic signing of documents in response to COVID-19. This may change in the future as the pandemic situation evolves.

The South Australian Government has however extended the classes of persons who may witness statutory declarations.

Further information

The Australian Government Solicitor’s fact sheet provides a comprehensive summary of the requirements that corporations and company officers must satisfy when executing documents remotely. This can be downloaded from

Fears of Div 7A danger from COVID-relaxed loan repayments unfounded

The ATO has clarified its position regarding loans, and the repayments of loans that may have been put on hold for the period that COVID-19 has a grip on the economy and our lives.

An important sidebar to the ATO’s announcement is the implications regarding Division 7A — just in case you have had some stress about possible Div 7A outcomes because a creditor has not insisted on payment.

In normal circumstances, if a private company forgives a debt, it is considered a deemed dividend under Division 7A — “a debt is forgiven if a reasonable person would conclude a creditor will not insist on payment or rely on the borrower’s obligation to pay”.

But the ATO states that “allowing more time to replay a debt due top COVID-19 will not result in the debt being treated as forgiven”.

Further, it says: “If a creditor only postpones an amount payable and the debtor acknowledges the debt, a debt is not considered forgiven. This is unless there is evidence that the creditor will no longer rely on the obligation for repayment.”

Note also that just before the new financial year, the ATO issued an announcement entitled Request to extend time to make minimum yearly repayments for COVID-19 affected borrowers. It said, in part: “As a result of the COVID-19 situation, we understand that some borrowers are facing circumstances beyond their control. To offer more support, we’ll allow an extension of the repayment period for those borrowers who are unable to make their MYR” (minimum yearly repayment).

Relating as it does to a possible inability of borrowers under Division 7A loan agreements to make the minimum yearly repayment required due to the COVID-19 economic situation, the announcement provided a procedure whereby a borrower who is unable to make repayments on a Division 7A loan can request an extension of time to make the minimum yearly repayment.

The benchmark interest rate for Div 7A purposes, by the way, is 4.52% for the income year ending 30 June 2021, the ATO has announced, and is relevant to private company loans made or deemed to have been made after 3 December 1997 and before 1 July 2020 and to trustee loans made after 11 December 2002 and before 1 July 2020.

SMSF regulations to allow six members under new legislation

A bill has been introduced into Parliament that partially implements a measure to allow an increase in the maximum number of allowable members in self-managed superannuation funds and small APRA funds from four to six.

First floated in the 2018-19 Federal Budget, the remainder of the measure is to be implemented through regulations. The bill also amends provisions that relate to SMSFs and small APRA funds to ensure continued alignment with the increased maximum number of members for SMSFs.

The reasoning behind the move is that SMSFs are often used by families as a vehicle for controlling their own superannuation savings and investment strategies. For families with more than four members, the only real options in the incumbent arrangements are to create two SMSFs (which incur extra costs) or place their superannuation in a large fund. The government says the change will help large families to include all their family members in their SMSF.

In some instances, the number of individual trustees that a trust can have may be limited to less than five or six trustees by state legislation. Such rules could prevent some or all members of a fund with five or six members from being individual trustees. In such cases, the members of a fund can use a corporate trustee in order for the superannuation fund to meet, or continue to meet, the amended definition of an SMSF.

Currently, if an SMSF has more than one director member, its accounts and statements for a year of income must be signed by at least two members in their capacity as individual trustees or as a director of a corporate trustee. As there cannot be more than four members of an SMSF under the current rules, these requirements ensure that all members sign the accounts and statements of SMSFs with one or two members. For SMSFs with three or four members, at least half of the members must sign its accounts and statements for an income year.

Under the updated requirements, an SMSF with one or two directors or individual trustees must have its accounts and statements signed by all of those directors or trustees. For all other SMSFs (that is, those with between three and six directors or trustees), the accounts and statements of the SMSF must be signed by at least half of the directors or individual trustees.

This approach maintains the standard under the previous provisions for funds that have between one and four directors or trustees, and extends the requirement that at least half of the directors or trustees sign the accounts and statements of an SMSF with either five or six directors or trustees.

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