We’ve received many questions from subscribers around how a “downturn of turnover” will be measured for the purposes of eligibility for the coronavirus-related Job Keeper Payment.
Last night there was fresh guidance from Treasury.
By way of background, one of the eligibility criteria for Job Keeper is that:
• for businesses that have an annual turnover of less than $1 billion, they estimate their turnover has fallen or will likely fall by 30% or more; or
• for businesses that have an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more) they estimate their turnover has fallen or will likely fall by 50% or more; and
• the business is not subject to the Major Bank Levy.
Treasury has indicated that the decline in turnover test is linked to the GST turnover test in particular the projected GST turnover – which will take into account anticipated decline in revenue. The test requires a business to measure its projected GST turnover and compare this to what is termed a relevant comparison period. If this equals or exceeds the following thresholds, the entity satisfied the decline in turnover test:
• ACNC-registered charities – 15%;
• entities with turnover less than $1bn – 30%;
• entities with turnover greater than $1bn – 50%.
There is scope for the ATO to apply an alternative test to different classes of entities.
The turnover test period must be a calendar month that ends after 30 March 2020 and before 1 October 2020, or a quarter that starts on 1 April or 1 July 2020. The relevant comparison period must be the period in 2019 that corresponds to this turnover test period.
Further ATO guidance will be forthcoming
The turnover numbers must be reported to the ATO before any payments will start, though there is a transitional rule for the first 2 JobKeeper fortnights.
The key take-away points are while, at this stage, this is Treasury guidance:
• the test/comparison period vis-à-vis 2019 to 2020– spans from April to the end of September
• if 2019 is not representative of typical turnover, another comparison period may be considered
• the ATO is willing to exercise its discretion where there are anomalous cases.