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ATO addresses JobKeeper tiers and what it expects of employers

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
23 September 2020 2 minute readShare

The ATO has commenced approaching employers to determine if the higher or lower JobKeeper rate applies to each of their eligible employees, and has confirmed that the method taken by employers when executing this task will be “very much situational”.

Speaking exclusively on the MyBusiness webcast, ATO Deputy Commissioner James O’Halloran revealed that the Tax Office will be presenting employers already enrolled in JobKeeper with employee lists and asking them to identify which tier applies to each of their eligible employees.

“We’ll be presenting to people in the next week or so their employee lists, if they’re currently in the system,” Mr O’Halloran said.


“We’ll be asking employers or people that have employees to then identify which employees are on tier 1, the higher JobKeeper rate, or the lower rate. That then will enable the payments to start to operate after 28 September.”

As announced earlier by the government, from 28 September, JobKeeper will become a two-tiered system, meaning that employees will be divided based on hours worked before either 1 March 2020 or 1 July 2020.


The tier 1 rate will apply to employees who worked for 80 hours or more in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, or eligible participants who were actively engaged in the business for 80 hours or more in February and provide a declaration to that effect.

According to the ATO, actively engaged means an employee that regularly performs, or manages the performance of, services the business provides; sells or manages the sale of goods of the business; performs other activities associated with managing the business; and exercises control over activities related to business strategy and growth.

The tier 2 rate will apply to all other eligible employees and business participants.

Mr OHalloran explained that employers will in fact be the ones to determine what tier their employees belong to.



How employers do this is “very much situational”, he noted. However, he did underline that the ATO will expect businesses to show “in some shape or form” what evidence they based their assessment on.

“Its not a matter of a particular format in its own right. It will very much depend on whats available, or what comes naturally out of the business action itself, or the manner in which people are in fact record keeping, if you like, for hours worked,” Mr O’Halloran said.

“I think its important to recognise that certainly Single Touch Payroll in itself contributes, but wed be looking for what is a natural record or support that does demonstrate that effort of active participation in a business on behalf of businesses and in terms of employees on what basis the hours have been done.

“But I can assure you, our intention, like we have demonstrated, is to recognise that some of these things aren’t us specifying a particular record or a particular account; its very much situational. And thats the way well continue to approach both the hours of work as well as the eligibility.”

Once businesses have divided their employees into tiers, they need to notify the ATO before they can claim a JobKeeper fortnight from 28 September. They must also notify their employees in writing of which rate applies to them within seven days of notifying the ATO. 

For more information on the ATO’s approach, tune into our webcast here.

For more information on identifying employees, click here.

ATO addresses JobKeeper tiers and what it expects of employers
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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