Essential guide to JobKeeper 2.0 for sole traders

This guide is for sole traders with no employees (i.e. self-employed).

JobKeeper 2.0 extends the JobKeeper program from 28 September 2020 to 28 March 2021. Whether you are new to the JobKeeper program, or have been receiving these payments previously, this comprehensive guide covers all the important information you need to know about it from here.

In this guide you will learn: 

1. How much sole traders can be paid from JobKeeper 2.0
2. How sole traders determine if they are eligible for JobKeeper 2.0
3. How sole traders can assess their decline in GST turnover
4. How sole traders determine their JobKeeper payment tier, and 
5. How sole traders can claim their JobKeeper 2.0 payment. 

1. How much sole traders can be paid from JobKeeper 2.0 

Payments from the program will reduce from 28 September 2020 from $1,500 to one of the two tier rates shown in the below table. From 4 January 2021, each of these payment tiers will again reduce to their final rate which will be paid each fortnight until JobKeeper’s planned conclusion on 28 March, 2021.

The payment tier you are eligible for beyond 28 September, 2020 will depend on the amount of hours you were involved in your business in a given reference period - which in most cases will be February, 2020. This will be discussed in more detail in a later section.

2. How sole traders determine if they are eligible for JobKeeper 2.0

All sole traders need to satisfy the new eligibility criteria to receive any JobKeeper payments beyond 28 September, 2020. These eligibility requirements apply to ALL sole traders, including those who may already be receiving JobKeeper payments before 28 September. 

All of the following criteria must be met:

1. You were running a business on or before 1 March, 2020 (i.e. had an active sole trader ABN, and were running a business)
2. You were actively engaged in this business as a business participant
3. Your business satisfies the actual decline in GST turnover test (discussed in later section), and 
4. Your business is not explicitly ineligible.

3. How sole traders can assess their decline in GST turnover

The actual decline in turnover test involves comparing your actual business income (GST Turnover) earned in a given 3 month period in 2020 against the same period last year. This test is different to what was required to receive JobKeeper prior to 28 September - which used estimates instead of actual figures, and also compared monthly periods instead of quarterly periods. 

For a recap on how to calculate GST Turnover for your business, click here. Ensure you total up your GST turnover across the three months within each comparison period. 

To receive JobKeeper payments between 28 September 2020 to 3 January 2021, businesses must demonstrate a 30% decline in their actual GST turnover across the following comparison period:

Jul - Sep 2020 & Jul - Sep 2019

Similarly, to receive payments between 4 January 2021 and 28 March, 2021, businesses will again need to demonstrate a 30% decline in actual GST turnover - this time across the following comparison period: 

Oct - Dec 2020 & Oct - Dec 2019 

Alternative tests

There are alternative tests available for sole traders who may have been impacted by certain events or circumstances that result in the above basic test not being appropriate. Information about these tests can be found here. If you require specific information about applying these tests, you should call the ATO on 13 28 61 for free guidance.

4. How sole traders can determine their payment tier

The Tier 1 rate of the JobKeeper payment will be applied if you satisfy the 80-hour threshold. This threshold is met if you:

1. Were actively involved in your business for at least 80 hours in your 29-day reference period, and
2. Have notified the ATO of this fact in your monthly business declaration (discussed later)

Please note that there are penalties for making a false declaration to the ATO about your involvement in your business. 

Your 29-day reference period will usually be the month of February 2020. For example, maybe you were overseas, sick, or injured during February, 2020 so your actual business involvement in that month does not reflect your typical time spent engaging with your business. 

If you are unable to satisfy the 80-hour involvement requirement in February, 2020, you may consider whether you meet the condition in an alternative reference period. 

An alternative reference period can be the most recent 29-day period where:

• All of the 29 days are within a single calendar month
• The 29-day period ends before 1 March, 2020
• Your total hours of active engagement within this period represents a typical 29-day period

You must keep records to show how you calculated your assessment of hours involved in your business. This can include business diaries, appointment books, timesheets, etc.

If you do not satisfy the 80-hour involvement requirement, then you will receive the relevant Tier 2 payment each fortnight.

5. How sole traders can claim their JobKeeper 2.0 payment

If you are already enrolled in JobKeeper and have been receiving payments prior to 28 September, 2020, you can skip to step 3. 

1. If you are joining JobKeeper for the first time (i.e. were not receiving JobKeeper prior to 28 Sep, 2020), you need to enrol 
2. Identify yourself as an eligible business participant
3. Check your actual decline in turnover, and submit this information to the ATO via the highlighted sections in below screenshot from your ATO portal (these sections will be activated from 1 October, 2020).
4. Make a monthly business declaration by the 14th of each month