In addition to the basic actual decline in the turnover test, the ATO has released their alternative decline in the turnover test for the second stage of JobKeeper.
These alternative turnover tests are for entities where the Commissioner is satisfied that there is not an appropriate relevant comparison period to satisfy the actual decline in the turnover test. Click here to read our JobKeeper update on eligibility.
Entities that can apply these alternative tests include:
| Alternative test |
Alternative test can be applied if: |
| Business commenced |
The entity has commenced business after the first day of the relevant comparison period but before 1 March 2020 |
| Business acquisition or disposal |
The entity acquired or disposed a part of its business at, or after, the start of the relevant comparison period and before the applicable turnover test period, and the acquisition or disposal changed the entity’s current GST turnover.
|
| Business restructure |
There was a restructure of their business, or a part of the business at, or after, the start of the relevant comparison period and before the applicable turnover test period, and the restructure changed the entity’s current GST turnover.
|
| Business growth test |
The entity had an increase in turnover of:
-
50% or more in the 12 months immediately before the applicable turnover test period or 1 March 2020
-
25% or more in the 6 months immediately before the applicable turnover test period or 1 March 2020
-
12.5% or more in the 3 months immediately before the applicable turnover test period or 1 March 2020.
|
| Drought or natural disaster |
The entity conducted business or some business in a declared drought zone, or declared natural disaster zone, during the relevant comparison period, and the drought or natural disaster changed the entity’s current GST turnover.
|
| Irregular turnover test |
The consecutive 3-month periods ending in the 12 months immediately before the applicable turnover test period or 1 March 2020 the lowest of the entity’s current GST turnover for any of those 3-month periods is no more than 50% of the highest of the entity’s current GST Turnover for any other of those 3-month periods; and the entity’s current GST turnover is not cyclical.
|
| Sickness, injury or leave for sole traders or small partnerships |
The entity is a sole trader or small partnership that has no employees, and the sole trader or at least one of the partners did not work for all or part or the relevant comparison period due to sickness, injury or leave, and the current GST turnover of the business was affected by the sole trader or partner not working for all or part of that period.
|
JobKeeper period between 28 September 2020 to 3 January 2021.
- Applicable turnover test period - September 2020 quarter
- Relevant comparison period - September 2019 quarter
JobKeeper period between 4 January 2021 to 28 March 2021.
- Applicable turnover test period - December 2020 quarter
- Relevant comparison period - December 2019 quarter.
Each of the above-mentioned alternative test has different methodologies prescribed by the ATO on how to calculate the required decline in turnover to be eligible for the JobKeeper period. Below are two examples on the application of the alternative tests.
Example 1 - New Business
On 6 November 2019, the Creative Enterprise Company (CEC) was incorporated and commenced business. As such, the relevant comparison period is not available.
The Creative Enterprise Company (CEC) assesses its eligibility for JobKeeper payments based on a current GST turnover for the quarter ending 30 September 2020 of $5 million. The following monthly current GST turnovers have been recorded by CEC during the 3-month period immediately before 1 March 2020.
| Month |
Current GST Turnover recorded by CEC |
|
December 2019
|
$3 million
|
|
January 2020
|
$3 million
|
|
February 2020
|
$3 million
|
CEC applies the prescribed alternative test. The 3 months’ current GST turnover is $9 million. CEC compares this with the current GST turnover for the quarter ending 30 September 2020 of $5 million and finds that its current GST turnover for the quarter ending 30 September 2020 falls short of the figure worked out using the second alternative test by more than 30%. The second alternative decline in turnover test is satisfied.
Example 2 - Substantial increase in turnover
Before 1 March 2020, Blue Co had an increase in current GST turnover and wants to ascertain whether it can apply, and satisfy, the alternative test under section 10 of this instrument.
Blue Co uses its current GST turnover of $150,000 for the turnover test period of the quarter ending 30 September 2020. Blue Co’s current GST turnover for the month of February 2019 was $50,000 and its’ current GST turnover for the month of February 2020 was $80,000.
Blue Co applies the alternative test under section 10 of this instrument as its current GST turnover for the month of February 2020 increased by $30,000 from the current GST turnover for the month of February 2019 of $50,000 and $30,000 is more than 50% of $50,000.
The following monthly current GST turnovers were recorded by Blue Co:
| Month |
Current GST Turnover recorded by Blue Co |
|
December 2019
|
$70,000
|
|
January 2020
|
$75,000
|
|
February 2020
|
$80,000
|
Blue Co’s 3 months’ current GST turnover is $225,000 and compares this with the current GST turnover for the quarter ending 30 September 2020 of $150,000. Blue Co finds that its current GST turnover for the quarter ending 30 September 2020 falls short of the 3 months’ current GST turnover by $75,000, which is greater than 30%. The alternative decline in turnover test is satisfied.
If you wish to discuss the new rules in further detail, please contact your trusted Ulton advisor.
Source:
Federal Register of Legislation - https://www.legislation.gov.au/Details/F2020L01200
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