The JobKeeper 2.0 extension Legislation has passed and with it, the ATO has issued its interpretation of the rules so business owners can understand the changes.
Importantly, whilst some things change, some stay the same – in summary, these are:
- the meaning of an eligible employee;
- requirement of employers to meet the minimum wage condition;
- the Decline in Turnover percentage – 15% for charities, 30% for entities with turnover under $1bn and 50% for entities with turnover in excess of $1bn;
- special rules for service entities – where the ‘principal purpose’ of the service entity is the supply of employee labour services and the service fee is not tied to the business entity’s turnover; and
- the monthly declaration of turnover will still be required.
Ensure you are across the changes to the payment rates, the reference period and working requirements for new and existing employees by re-visiting this previous article on JobKeeper.
In the original JobKeeper Extension draft legislation, an entity that had not suffered a decline in turnover of at least 30% in the June quarter but did in September and/or December quarters would not be eligible to enrol in the extended scheme at all. The good news is, turnover is being re-tested so an entity can now enrol based on a 30% decline in the September quarter (to access the subsidy from 28 September to 3 January 2021) OR the December quarter (to access the subsidy from 4 January to 28 March 2021).
Calculating the GST Turnover – Attributing GST
The main difference in this edition of Coronavirus Stimulus is that there is now no choice in how you attribute your GST turnover.
This means you cannot choose to use cash or accruals to determine the entity’s turnover unless the entity is not registered for GST.
If an entity is registered for GST
If the entity has always been registered for GST on a cash basis, it should use the cash basis to compare turnover and vice versa for an accruals basis.
If an entity recently changed its registration
If an entity was registered on a cash basis at any time from the commencement of the comparison period but changed to an accruals basis thereafter, then it should use the cash basis for both periods and vice versa for an accruals basis.
If an entity recently registered for GST
If an entity first registered for GST after the comparison period (for example, after 30 September 2019), then the entity should use the attribution basis in place at the beginning of the test period e.g. 1 July 2020.
Alternative Tests
If the quarter ending 30 September 2019 is not an appropriate comparison period, an alternative test may be used. Such situations can include:
If the reduction in income is below 30%, do any of the following alternative tests apply?
- Business started after 1 July 2019 but before 1 March 2020,
- Business acquisition or disposal that changes the entity’s turnover,
- Business restructure that changed the entity’s turnover,
- Business affected by drought or natural disaster,
- Business has had a substantial increase in turnover,
- Business that has irregular turnover, or
- Sole trader or small partnership with sickness, injury or leave.
If you are unsure as to whether the alternative income tests apply to your circumstances or unsure about your eligibility in general, get in touch with one of our dedicated tax consultants.
Remember to make the payment!
For the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 only, the ATO are allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme. For future fortnights, you will need to make the payment in accordance with the usual payroll of your business. If employees leave, be sure to advise your Tax Agent and/or the ATO.
What other benefits are available?
If an employer was receiving the original JobKeeper subsidy and will not qualify for the extension, but still has a decline of 10% in turnover, they can continue to access temporary Fair Work Act provisions for their employees. These include the option to reduce ordinary hours of employees by 40% compared to pre-pandemic hours and directions over the duties and location of work.
A certificate will be required from the employer’s Tax or BAS Agent unless they are a small business with fewer than 15 employees, in this case the business owner can complete a statutory declaration.
If you have been receiving JobKeeper or have queries regarding the JobKeeper 2.0 extension and recent changes, please reach out to your dedicated DPM Tax Consultant who will be happy to help you through this process.
If you have questions and you wish to talk to a tax expert feel free to get in contact with the team:
- for existing DPM tax clients, click here.
- for non DPM tax clients, click here.
