Prime Minister Scott Morrison has confirmed the JobKeeper wage subsidy will be extended until March, under a reduced two-tier payment system.
Businesses currently on the JobKeeper scheme receive $1,500 a fortnight per staff member to keep them employed during the COVID-19 pandemic.
JobKeeper will become a two-tier system, with different rates for full-time workers and others.
Starting in October, until December 2020, the $1500-per-fortnight JobKeeper wage subsidy will be reduced to $1,200 for full-timers and $750 for the part-time rate.
This will reduce to $1,000 and $650 respectively from January 2021 until March 2021.
Businesses will need to pass a new eligibility test, for JobKeeper, in October, and again in January, to make sure they still require the support.
JobSeeker has also been extended until December 2020 with the income free threshold increased to $300
The JobSeeker unemployment benefit will also be revised, with the $550 COVID-19 supplement set to drop to $250 through until the end of the year.
From August, those on JobSeeker will have to apply to employment services and undertake a set number of job searches a month.
Mark Molesworth, tax partner at BDO in Australia, said the extension of the payments would provide a parachute for a softer landing for many businesses but for others it will mean they will no longer be viable.
“With a ‘fiscal cliff’ predicted for the end of September, when these schemes were to have finished, it’s clear that a parachute was needed to provide ongoing support to overcome the impact of the coronavirus pandemic,” Molesworth said.
“But an extension alone will not be enough for some businesses. Lowering the rates will mean that less support goes to businesses as a wage subsidy. This might make some that are currently surviving no longer viable.
“Similarly, where JobKeeper is acting as an income supplement to individuals, the reduction in support may lead to less money spent in the economy, which would have a flow-on effect for the viability of many businesses.”
The government confirmed businesses would need to pass the new eligibility test in October, and again in January, to make sure they still require the support.
This process will look at testing actual turnover to determine whether the business has recovered in the last six months.
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