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IS YOUR BUSINESS ELIGIBLE FOR JOBKEEPER EXTENSION? (from 28th September 2020 to 3rd January 2021)
The ATO released its guidelines on how a business would be eligible for the JobKeeper Extension last week by registering the following rules through three legislative instruments:
 
  1. Decline in Turnover Test determination;
  2. Higher Rate determination;
  3. Alternative Reference Period determination;
 
The most important test is the Decline in Turnover Test as it determines whether a business is eligible for the JobKeeper Extension.
 
Instead of using the same rules as previous JobKeeper scheme between March to September 2020 (where most businesses will need to show their turnover declined by 30% or more in a specific period, the ATO has make some fundamental changes to the rules.  They include (broadly):
 
  1. The test period for JobKeeper Extension 1 is the quarter from 1st July 2020 to 30th September 2020 As a result unless the alternative test applies, the comparison period is the quarter ending 30th September 2019;
  2. The test on the GST Turnover is based on actual sales made in the quarter, not projections;
  3. The method of measurement for turnover must be the same method the business use to report those sales to the relevant Business Activity Statement (if registered for GST).  This means if the business was registered for GST on a Cash basis, it MUST measure its GST turnover for the September 2020 quarter on a Cash basis and compare that with the GST turnover for the September 2019 quarter (also measured on a cash basis). 
 
In other words, unless the alternative test applies (the ATO is yet to announce how and when it might apply), the GST reporting method is the only method the business can use to measure its GST turnover, regardless whether it is a true reflection on the business’ current position.
 
To avoid any misunderstanding of the new rules for the JobKeeper Extension we encourage all clients to contact their client relationship manager and discuss how these rules might apply to their businesses. 
 
 
Full details in relation to the Decline in Turnover test can be found in the following links:
 
Legislative Instrument
https://www.legislation.gov.au/Details/F2020L01171
 
Explanatory Statement
https://www.legislation.gov.au/Details/F2020L01171/Explanatory%20Statement/Text
 
 
Details on the ATO website (see below)
https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Actual-decline-in-turnover-test/
 

Actual decline in turnover test


You can satisfy the actual decline in turnover test in two ways: There is also a modified basic test for group employer labour entities.

Generally, businesses will use the basic test, which is based on GST turnover. An alternative test has been made available for some cases where the normal comparison period is not appropriate. For example, when your business has been operating for less than a year. There are other instances where you can use an alternative test.

For JobKeeper fortnights from 28 September 2020 you will need to meet an actual decline in turnover test. The actual decline in turnover test is similar to the original decline in turnover test. However:
  • it must be done for specific quarters only
  • you must use actual sales made in the relevant quarter, not projected sales, when working out your GST turnover
  • you must allocate sales to the relevant quarter in the same way you would report those sales to a particular business activity statement if you were registered for GST.
The actual decline in turnover test must be satisfied to be eligible for both JobKeeper extension periods:
  • Extension 1 – from 28 September 2020 to 3 January 2021, and
  • Extension 2 – from 4 January 2021 to 28 March 2021.


JobKeeper Extension 1 – 28th September, 2020 to 3rd January, 2021


The actual decline in turnover test is satisfied for extension 1 when your current GST turnover for the quarter ending 30 September 2020 (the months of July, August and September) has declined by the specified shortfall percentage in comparison to your current GST turnover for the quarter ending 30 September 2019.
If the quarter ending 30 September 2019 is not an appropriate comparison period you may be able to use the alternative test.


JobKeeper Extension 2 – 4th January, 2021 to 28th March, 2021


The actual decline in turnover test is satisfied for extension 2 when your current GST turnover for the quarter ending 31 December 2020 (the months of October, November and December) has declined by the specified shortfall percentage in comparison to your current GST turnover for the quarter ending 31 December 2019.

If the quarter ending 31 December 2019 is not an appropriate comparison period you may be able to use the alternative test.