The ATO has been progressively releasing further guidance regarding the JobKeeper Payment.
Importantly, if you wish to claim JobKeeper from the start date of 30 March, any eligible employees need to have been paid the equivalent of $1,500 per fortnight in gross payment by 8 May 2020.
Enrolment to apply from 30 March can be done anytime up until 31 May however.
It is worth remembering that even if you do not qualify from 30 March, you may qualify in future months, so you can continuing testing eligibility.
You only need to satisfy the fall in turnover test once – you don't need to test your turnover in the following months or quarters.
Below are various clarifications that have been released recently which have been extracted from the ATO website:
Applying the turnover test
Identify the turnover test period
How to calculate a fall in turnover for the first fortnight starting 30 March 2020
How to determine a fall in turnover
Calculating GST turnover
Basic test
Alternative test
Modifications to projected and current GST turnover
Should you need further advice or need to discuss your particular requirements, please contact us, Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au
Applying the turnover test
You can satisfy the fall in turnover test in two ways:
The basic test
The alternative test
Generally businesses will use the basic test, which is based on GST turnover. Where appropriate turnover comparison periods are not available (for example, where your business has been operating for less than a year) we may make an alternative test available.
You only need to satisfy the fall in turnover test once – you don't need to test your turnover in the following months or quarters.
However, there are ongoing monthly turnover reporting requirements.
Identify the turnover test period
Choose whether you are comparing your monthly or quarterly turnover. You can choose to compare the relevant month or quarter, regardless of whether you report quarterly or monthly.
For qualification from the start of the scheme, the turnover month used can be either March 2020 or April 2020. To qualify at a later time, the turnover month can also be May, June, July, August or September 2020, provided that the turnover month is the month in which the first fortnight for which you claim the JobKeeper payment ends, or another earlier month.
In other words, you will only be eligible for JobKeeper payments for JobKeeper fortnights that end on or after your turnover test period starts.
How to calculate a fall in turnover for the first fortnight starting 30 March 2020
To work out your fall in turnover, you can compare either:
GST turnover for March 2020 with GST turnover for March 2019
projected GST turnover for April 2020 with GST turnover for April 2019
projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.
It is worth remembering that even if you do not qualify from 30 March, you may qualify in future months, so you can continuing testing eligibility.
How to determine a fall in turnover
You only need to satisfy this requirement once – you don't need to retest your turnover each month. However, you will be asked each month to tell us your current and projected turnover.
At the time you enrol in the JobKeeper Payment scheme, you need to confirm that your business in a relevant period has had, or is likely to have, a:
30% fall in turnover (for an aggregated turnover of $1 billion or less)
50% fall in turnover (for an aggregated turnover of more than $1 billion), or
15% fall in turnover (for ACNC-registered charities other than universities and schools).
Calculating GST turnover for JobKeeper Payment
To help clarify how to calculate GST turnover for the purpose of determining eligibility for the JobKeeper program, we can confirm the following:
If your clients account for GST on a cash basis, they can use either cash or accruals (non-cash) to calculate their GST turnover.
If your clients currently use accruals to account for GST we expect in most cases they would continue to use this method. However, if they choose to use the cash basis we may want to understand why the different approach is an appropriate reflection of turnover.
In both cases, the basis used must be the same for calculating your clients' projected and current GST turnover. Whichever calculation used, your clients will need to keep records to demonstrate the calculation and explain why this method was chosen.
Check our frequently asked questions for examples to help you and your clients understand how they may calculate their GST turnover for the purposes of enrolling in the JobKeeper Payment scheme.
More information is available at https://www.ato.gov.au/Tax-professionals/Newsroom/Your-practice/Calculating-GST-turnover-for-JobKeeper-Payment/
Calculating turnover
The turnover calculation is based on your sales (excluding GST). You need to compare your sales (or likely sales) for a recent month with the same month last year (for example compare April 2019 and April 2020 sales). You can also use the April to June 2020 quarter to compare the same quarter last year.
If you are working out your likely sales you need to:
make a reasonable estimate
document the reasons for your estimate.
As a practical matter, we accept that you may use either a cash or accruals basis to work out your turnover. However, you must use the same method for both periods. We expect that you will normally use the same method as you use for GST.
Examples of some of the things that should be excluded from turnover are:
include input-taxed sales (e.g. bank interest, sale of shares, residential rental income)
sales not connected with an enterprise that you carry on (e.g. sale of private car).
You don’t need to be registered for GST to calculate your turnover. GST turnover is just how we work out what is included and what is not.
There are a few special situations where we have made available some extra ways of calculating the fall in turnover. This is called the alternative turnover test.
Basic test
This test is satisfied where your projected GST turnover for the turnover test period falls short of your current GST turnover for the relevant comparison period, by the specified percentage (generally 30%).
To apply the basic test, you need to do:
Step 1: identify the turnover test period
Step 2: identify the relevant comparison period
Step 3: work out the relevant GST turnover
Step 4: determine which shortfall percentage applies
Step 5: determine if GST turnover has fallen by the specified shortfall percentage
The turnover calculation is based on GST turnover, but there are some modifications to the definitions of current and projected GST turnover, including disregarding GST grouping.
If the basic test is not successful, then the following Alternative Tests can be considered
Alternative test
The Commissioner has determined alternative tests for fall in turnover for classes of entities where there is not an appropriate relevant comparison period in 2019 for the purposes of an entity in the class of entities satisfying the basic test.
The relevant appropriate comparison period in 2019 is a calendar month that ends after 30 March 2019 and before 1 October 2019 or a quarter that starts on 1 April 2019 or on 1 July 2019.
However, if an entity satisfies the basic test, it does not need to go to an alternative test determined by the Commissioner.
Circumstances where an alternative test applies:
The entity commenced business after the relevant comparison period (the business did not exist in that period) but not on or after 1 March 2020.
The entity acquired or disposed of part of the business after the relevant comparison period (the business is not the same business in that period as it is now).
The entity undertook a restructure after the relevant comparison period (the business is not the same business in that period as it is now).
The 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
12.5% or more in the 3 months immediately before the applicable turnover test period.
The entity was affected by drought or other declared natural disaster during the relevant comparison period.
The entity has a large irregular variance in their 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
The 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.
If an alternative decline in turnover test applies in these circumstances, the Commissioner also sets out what that alternative decline in turnover test is.
You can get more information on these alternative tests in the Legislative Instrument and Explanatory Statement:
The Commissioner cannot determine an alternative decline in turnover test in all circumstances. It is only where there is an event or circumstance that is outside the usual business setting for entities of that class that results in the relevant comparison period in 2019 not being appropriate for applying the basic test.
The Commissioner can also only determine a test for a class of entities, and cannot make discretionary decisions for individual entities.
If you fall into more than one of the classes of entities covered by the alternative test, you can choose which alternative decline in turnover test to apply. You only need to satisfy one of the tests (it does not matter if you do not satisfy one of the other tests that applies to you).
Modifications to projected and current GST turnover
Projected GST turnover and current GST turnover are defined in the GST Act but have been modified for JobKeeper purposes as explained below. The amounts included in calculating projected GST turnover and current GST turnover are the same regardless of whether you are currently GST registered.
When calculating GST turnover for an entity that operates two or more businesses, the turnover from each business is combined. Entities that form part of a GST group or consolidated group must work out the projected GST turnover and current GST turnover and apply the fall in turnover test for each entity individually.
There are four main modifications to the GST turnover calculation:
projected GST turnover and current GST turnover are calculated for the relevant month or quarter being tested (rather than for 12 months)
where an entity is part of a GST group, the entity calculates its GST turnover as if it wasn’t part of the group. This means that supplies made by one group member to another will be included in GST turnover for the purposes of the fall in turnover test
the calculation includes the receipt of tax deductible donations by a deductible gift recipient. It also includes gifts of money, property (with a market value of more than $5000) and listed Australian shares received by an ACNC-registered charity (that is not a deductible gift recipient). However, none of these receipts are included if they are from an associate, and
external Territories (e.g. Norfolk Island) are treated as if they formed part of the indirect tax zone (i.e. Australia).
Projected GST turnover and current GST turnover excludes the following:
GST you included in sales to your customers (if any)
sales that are input taxed sales (e.g. bank interest, sale of shares, residential rental income)
sales not connected with an enterprise that you carry on (e.g. sale of private car)
sales that are not made for payment (unless a taxable supply to an associate)
payments for no supply (e.g. JobKeeper payments)
gifts and donations (except for deductible gift recipients and ACNC-registered charities as discussed above)
sales not connected with Australia, for example:
sales of services made through a business you carry on outside Australia
sales of goods purchased and sold from a place outside Australia
sale of real property situated outside Australia