JobKeeper - Critical Reassessment Needed
All businesses currently enrolled in the JobKeeper system will shortly face two critical questions. The first is whether they will qualify for the extension to the system after September and the second is, if they do qualify, what do they have to do next.
Continued eligibility for the months of September to December 2020 requires meeting the new decline in turnover test.
For most businesses, this will involve comparing the business’ ‘actual GST turnover’ for the September quarter 2020 with the ‘actual GST turnover’ for the September quarter 2019. For GST registered businesses, this will be the amount included on the business activity statement (BAS) at G1 minus the amount reported at 1A. this will be the total of taxable supplies excluding GST and using the same cash or accruals basis of accounting as is used for the BAS.
For businesses which are not registered for GST, the ‘actual GST turnover’ is the total of business sales as well as some other types of income and sale proceeds, such as the sale of business equipment.
Businesses which cannot use the decline in turnover test set out above or consider it would produce an inaccurate result may be able to use an alternative test. This could be because they started during or after the September 2019 quarter; bought or sold part of the business or bushfires adversely affected their September 2019 quarter turnover.
Continued eligibility between October and December 2020 requires that the decline in turnover under these new tests was at least 30%.
If a business does not meet this test it is still entitled to meet the further test for eligibility to the JobKeeper system for the months of January to March 2021. That test will require that the ‘actual GST turnover’ for the December 2020 quarter was at least 30% less than the ‘actual GST turnover’ for the December 2019 quarter. No doubt alternative tests for that period will also be released in due course.
Please let us know if you need help to determine your business’ decline in turnover, particularly if an alternative test is applicable to it.
There are a number of requirements if the business remains eligible.
Firstly, the business will need to advise the Australian Taxation Office that it has elected to continue in the JobKeeper system.
Employees need to be paid at least the amount of JobKeeper subsidy, which has been reduced compared to the current system. This is complicated by the introduction of a two tiered system of payment. Employees who worked at least 80 hours in either of the pay cycles for the month before 1 March 2020 or for the month before July 2020 must be paid at least $1,200 per fortnight. Other eligible employees must be paid at least $750 per fortnight.
Eligible business participants also face a reduced and two tier system for their subsidy in the new system. For eligible business participants who were ‘actively engaged in the business’ for at least 80 hours in the calendar month of February 2020, the subsidy will be $1,200 per fortnight. For other eligible business participants, the subsidy will be $750 per fortnight.
Eligible business participants must notify the Commissioner ‘on the approved form’ which tier of payment is applicable.
The Explanatory Statement to this JobKeeper extension makes it clear that businesses ‘must be in a position to reasonably demonstrate that basis on which they determined that a business participant was actively engaged in the business for the required number of hours in February 2020.’ The Treasurer and Commissioner have both spoken of penalties for incorrect levels of involvement being submitted.
Please contact Daniel Rands at [email protected] for any specific advice or assistance