As detailed by Lawyers Weekly’s sister brand Accountants Daily, employees who worked for 80 hours or more in the 28-day period before either 1 March 2020 or 1 July 2020 will receive $1,200 per fortnight, while all other employees will receive $750, for the first extension period running from 28 September 2020 to 3 January 2021.

For the second period running from 4 January 2021 to 28 March 2021, the rate will drop to $1,000 per fortnight and $650 per fortnight, respectively.

In conversation with Lawyers Weekly, Murray Howlett – a partner with chartered accounting firm Pilot Partners – said that, for law firms who have been relying on JobKeeper since the onset of COVID-19, the second iteration of the measure provides an extension of the payment schemes for businesses that have experienced a significant decline in turnover (i.e. 30 per cent for the majority of businesses).

“JobKeeper 2.0 eligibility is based around an entity recording a decline in actual turnover during the September quarter (for payments until 3 January) and December quarter (for payments until 28 March). The original JobKeeper was based on declines in projected, not actual, turnover,” he explained.

“Alternative turnover-based eligibility criteria have been flagged by the government, but no details have been announced as yet.”

From a tax perspective, the biggest challenge for law firms at this critical juncture “is getting JobKeeper 2.0 right”, Mr Howlett submitted.

“In addition to correctly assessing the entity’s decline in actual turnover for both the September and December quarters, a two-tiered payment system has been introduced which brings with it additional work for accounting staff,” he said.

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“Further, employers are obliged to ascertain which reference period provides employees with the greatest JobKeeper payment rates. Correctly classifying employees and business participants will be vital in correctly claiming JobKeeper extension payments.”

Ensuring that one’s firm’s accounts are up to date, Mr Howlett said, will be the first step in assessing eligibility for the extended payments. 

“Further, firms will need to determine which employees and business participants will be eligible for the extension, and which payment rates apply to them.  This will require a review of their hours worked in the 28-day periods before 1 March and 1 July 2020 for employees, and February 2020 for business participants,” he noted. 

“It will also be possible to utilise a third, different period if the standard options are not reflective of ordinary working arrangements.

“Good business management will be the key here.”

Law firms must ensure that their “ducks are in a row” with respect to preparation for the JobKeeper extension, Mr Howlett insisted.

“Early assessments of declines in turnover, and the classification of employees and business participants will be key to ensuring that eligible businesses can commence complying with the JobKeeper’s rules (including the wage condition) to receive payments from 28 September onwards,” he said.

Forward planning will be essential as the nation starts to turn its attention to 2021 and a post-pandemic landscape, Mr Howlett surmised.

“Many firms and partners have used the ATO’s concessions to vary down their pay as you go instalments. Whilst this provided a short-term cash flow gain, the tax remains payable and should be factored into all cash flow forecasts. This also applies to deferred state taxes and pay as you go withholding,” he outlined.

“Failing to fully investigate your firm’s eligibility for the JobKeeper extension could cost significant amounts in lost payments.”