JobKeeper Turnover Tests and Further Guidance
The ATO have released further guidance in relation to the JobKeeper Payment scheme. Here we have provided a summary of the latest guidance and information:
Eligible Business Participants
Eligible business participants can enrol for JobKeeper in the same was as employers can enrol. That is, through the ATO Business Portal, the ATO Tax Agents Portal or through the ATO BAS Agents Portal.
Eligible business participants include the following:
- Sole Traders;
- One partner in a partnership;
- One director or shareholder of a company; and
- One beneficiary of a trust.
Eligible business participants (apart from sole traders) need to complete the Business Participant Nomination Form. The form does not have to be lodged with the ATO, but it should be completed and provided to the eligible business before that business enrols for JobKeeper.
Please note that an eligible business can claim JobKeeper payments for both employees and one eligible business participant.
For further information about eligible business participants, please refer to the link below: https://www.ato.gov.au/General/JobKeeper-Payment/Sole-traders-and-other-entities/
Fall in Turnover Tests
There are two broad ways that a business can satisfy the fall in turnover test:
- The basic test; or
- The alternative test.
We outlined in our last update that the basic test is satisfied where a business can demonstrate the following:
- A 30% fall in GST turnover for March 2020, compared to GST turnover for March 2019;
- A 30% fall in projected GST turnover for April 2020, compared to GST turnover for April 2019; or
- A 30% fall in projected GST turnover for the quarter starting April 2020, compared to GST turnover for the quarter starting April 2019.
The ATO have now released some further information in relation to the basic test and what is “GST turnover”. Please refer to the link below:
One important thing to note when determining GST turnover is that:
- Businesses that use the accruals basis for reporting GST must use an accruals basis for calculating GST turnover; whereas
- Businesses that use the cash basis for reporting GST can use either an accruals basis or a cash basis for calculating GST turnover.
The ATO have now released some guidance on how the alternative test will operate. In summary, businesses will be able to use the alternative test where they do not satisfy the basic test and one of the following circumstances applies:
- An entity commenced business after the relevant comparison period (as outlined in the basis test);
- An entity acquired or disposed of part of a business after the relevant comparison period;
- An entity undertook a restructure after the relevant comparison period;
- An entity’s turnover substantially increased by:
- 50% or more in the 12 months immediately before the applicable turnover test period; or
- 25% or more in the 6 months immediately before the applicable turnover test period; or
- 5% or more in the 3 months immediately before the applicable turnover test period.
- An entity was affected by drought or other declared natural disaster during the relevant comparison period;
- An entity had a large irregular variance in its turnover for the quarters ending in the 12 months before the applicable turnover test period (excluding entities that have cyclical or regular seasonal variance in their turnover); or
- An entity is a sole trader or small partnership where sickness, injury or leave have impacted an individual’s ability to work, which has affected turnover.
The Federal government have issued rules (Alternative Decline in Turnover Test Rules 2020) detailing how business in the above circumstances will compare their current GST turnover with relevant periods, according to those circumstances. The rules are complex and will only apply to a small portion of our clients, so we have not attempted to summarise them here. If you believe the alternative test applies to your circumstances, we are available to assist you to navigate through the rules. For more information, please refer the link below, which outlines the alternative test and includes a link to the Alternative Decline in Turnover Test Rules:
Enrolling for the JobKeeper Payment
Businesses have been able to enrol for JobKeeper from 20 April,2020. Our current understanding is that businesses wishing to claim the JobKeeper payment for April, will need to enrol by 30 April. Please don’t hesitate to contact our office if you need assistance.
Identify and maintain your eligible employees:
- Employers that use STP enabled payroll software with JobKeeper functionality will be required to update each eligible employee in the software and lodge the information via the STP software by 30 April 2020.
- Employers that don’t use STP enabled software and have less than 40 employees will be required to manually enter the tax file number and date of birth of each eligible employee online from 4 May 2020.
Make a Business Monthly Declaration:
- Each month, employers must reconfirm their reported eligible employees. This can be done via a Business Monthly Declaration report, which can be lodged through the business portal or via your tax or BAS agent.
- Businesses will also be required to provide information on their current and projected GST turnover. The ATO have advised that this is not to retest eligibility, but rather an indication of how businesses are progressing under the JobKeeper Payment scheme.
Please refer to the link below for further guidance:
Once again, if you need any assistance in relation to your obligations under the JobKeeper Payment scheme, please contact our office.
Please do not hesitate to contact our office should you have any queries in relation to the above or any other Government support measures that have been announced in recent weeks.