Turnover Tests for JobKeeper
Projected Turnover
In determining whether the turnover of a business has fallen (or is likely to fall) by at least 30% (or 50% as the case may be), the business would generally need to show a decline in its projected turnover in the current period (i.e., either a month or quarter) relative to its current turnover in the corresponding period in the 2019 income year.
The required reduction in turnover (either by the 30%; 50%; or 15% as applicable) only needs to be satisfied once during March 2020 to September 2020 and does not need to be re-tested each month. Simply said: If you work out that you qualify for the JobKeeper payments at any point because your turnover has declined by the relevant amount, you remain eligible and do not need to keep testing turnover in following months.
However, you will have ongoing monthly reporting requirements.
At the time you enroll 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).
A quarter period can also be used for the test instead of a month, in that case it will be only for the quarters ended 30 June 2020 and 30 September 2020.
Whether a month is used or a quarter, the test compares it to the corresponding period in the previous year.
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:
In determining whether the turnover of a business has fallen (or is likely to fall) by at least 30% (or 50% as the case may be), the business would generally need to show a decline in its projected turnover in the current period (i.e., either a month or quarter) relative to its current turnover in the corresponding period in the 2019 income year.
The required reduction in turnover (either by the 30%; 50%; or 15% as applicable) only needs to be satisfied once during March 2020 to September 2020 and does not need to be re-tested each month. Simply said: If you work out that you qualify for the JobKeeper payments at any point because your turnover has declined by the relevant amount, you remain eligible and do not need to keep testing turnover in following months.
However, you will have ongoing monthly reporting requirements.
At the time you enroll 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).
A quarter period can also be used for the test instead of a month, in that case it will be only for the quarters ended 30 June 2020 and 30 September 2020.
Whether a month is used or a quarter, the test compares it to the corresponding period in the previous year.
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:
1.
2. 3. |
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. |
How you choose to project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS, though you can do that if it is easier.
Turnover is defined according to the current calculation for GST purposes and what is reported on Business Activity Statements. It includes all taxable supplies and all GST free supplies but not input taxed supplies. For businesses that are part of a GST group they must include intra-group transactions in the turnover, which are generally ignored for GST purposes. Under the GST law, only Australian based sales are included and therefore, only Australian based turnover is relevant. A decline in overseas operations will not be counted in the turnover test.
The decline in turnover test is based on comparison of projected GST turnover with the GST turnover of the relevant comparative period. While the GST definition of turnover is used for determining the reduction in turnover, determining whether an employer has a $1 billion turnover will be based on aggregate turnover, which is assumed to be based on the general definition of ‘aggregate turnover’ in the income tax law. |
The Commissioner of Taxation also has the discretion to set out alternative tests that can establish your eligibility when turnover periods are not appropriately comparable (for example, if your business has been in operation less than a year). We will provide more information soon about alternative tests.
How does an employer pay their employees under an award where they have had to reduce their hours and receive the Jobkeeker allowance for these employees?
Grouping (Larger Corporations)
Turnover calculation is based on GST turnover, but there are some modifications, including disregarding GST grouping where two or more associated business entities operate as a single GST group. Where an entity is part of a larger group this may affect how they apply the decline in turnover test to determine whether they are eligible. If the larger group has, or estimates they will have, an aggregated turnover of more than $1 billion for the income year in which the test period occurs or had an aggregated turnover of more than $1 billion for the previous year, the entity will be required to show a 50% decline in turnover to be eligible to receive JobKeeper payments.
Testing the decline in turnover is done on an individual employer entity basis. It only takes into account the turnover of the entity which is the employer, and not other members of a group.
The ATO will provide further information soon about applying the turnover test.
Employer Entities Only
Turnover is the turnover of the employer entity itself, it does not take into account the turnover of other entities in a group. This can cause an anomaly where a group uses one entity to employ all of its staff, or where a service entity type arrangement exists.
The ATO is expected to provide more information around this soon.
Period subject to flexibility
The employer must wait another month or quarter to meet the test if the turnover is still in excess of the scheme limitations.
No backdating
JobKeeper payments will be from the date of enrolment and not backdated to 30 March 2020.
Repayment of erroneous claims
Should the employer enrol in the scheme but end up not meeting the turnover test based on its actual monthly or quarterly results, it will need to repay the JobKeeper payments, with interest, unless the ATO applies a discretion. Note that reporting actual monthly turnover will be required to be provided to the ATO at the end of each month.
Aggregated turnover
Your aggregated turnover broadly includes your annual turnover, plus the annual turnover of all the entities that are connected or affiliated with you, subject to specific adjustments (for example, for transactions between you and those other entities). These connected entities or affiliates may be based in Australia or overseas.
How does an employer pay their employees under an award where they have had to reduce their hours and receive the Jobkeeker allowance for these employees?
Grouping (Larger Corporations)
Turnover calculation is based on GST turnover, but there are some modifications, including disregarding GST grouping where two or more associated business entities operate as a single GST group. Where an entity is part of a larger group this may affect how they apply the decline in turnover test to determine whether they are eligible. If the larger group has, or estimates they will have, an aggregated turnover of more than $1 billion for the income year in which the test period occurs or had an aggregated turnover of more than $1 billion for the previous year, the entity will be required to show a 50% decline in turnover to be eligible to receive JobKeeper payments.
Testing the decline in turnover is done on an individual employer entity basis. It only takes into account the turnover of the entity which is the employer, and not other members of a group.
The ATO will provide further information soon about applying the turnover test.
Employer Entities Only
Turnover is the turnover of the employer entity itself, it does not take into account the turnover of other entities in a group. This can cause an anomaly where a group uses one entity to employ all of its staff, or where a service entity type arrangement exists.
The ATO is expected to provide more information around this soon.
Period subject to flexibility
The employer must wait another month or quarter to meet the test if the turnover is still in excess of the scheme limitations.
No backdating
JobKeeper payments will be from the date of enrolment and not backdated to 30 March 2020.
Repayment of erroneous claims
Should the employer enrol in the scheme but end up not meeting the turnover test based on its actual monthly or quarterly results, it will need to repay the JobKeeper payments, with interest, unless the ATO applies a discretion. Note that reporting actual monthly turnover will be required to be provided to the ATO at the end of each month.
Aggregated turnover
Your aggregated turnover broadly includes your annual turnover, plus the annual turnover of all the entities that are connected or affiliated with you, subject to specific adjustments (for example, for transactions between you and those other entities). These connected entities or affiliates may be based in Australia or overseas.