How we prove you had a downturn21.04.2020
thing we need to understand is that this is hasty legislation, for the largest
amount of money any government has ever spent in Australia and it is full of
bugs. There will be new updates no doubt, and even Your Business Angels has
found a group that has been left out in the cold and we will go into bat for
them over the weekend.
Late on Friday April 10, explanatory
materials were released in relation to the JobKeeper payment that has now been
passed into law. The explanatory material clarifies one key aspect of the new
This is the key to helping businesses get
the job keep a money, and because most businesses in Australia operate on a
cash system to just work off accounting records wouldn’t be a true assessment
of the position. Many businesses have been banking their income from February
during March and there has been no reflection therefore of a downturn in their
accounts, however they may have a lot less business and some consideration has
been given by the government for this so that as an accounting firm we have
ways of calculating or various ways of calculating if you had a downturn.
To qualify for the JobKeeper wage subsidy,
one of the eligibility criteria is that:
• for businesses that have an annual aggregated turnover of less than $1 billion, they estimate their GST turnover has fallen or will likely fall by 30% or more or
• for businesses that have an annual aggregated 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 GST turnover has fallen or will likely fall by 50% or more.
is a crucial bit – Treasury has revealed that the
comparison period is for either (a) any monthly period from April 2020 to the
end of September 2020 or (b) any quarterly period from April to June or July to
September…compared to the same monthly or quarterly period in 2019.
Importantly, once this test is met for
either (a) a monthly period or (b) any quarterly period, there is no
requirement to re-test in later months or quarters.
For example, if a business assesses that
its turnover will fall by 30% in April 2020 compared to April 2019…then it
retains its eligibility until the JobKeeper payments stop for all businesses at
the end of September 2020. This is
irrespective of its turnover in the months subsequent to April 2020. It is not
required to estimate or determine turnover for subsequent periods.
every business in Australia is scrambling for Jobkeeper payments a lot of
payments will be made with the Australian Taxation Office auditing afterwards
so it’s best to get things right in the first place.
There are many businesses that feel that
their turnover will drop but not in the initial months therefore where an
entity does not qualify in the month of April 2020, for example, or the April
to June quarter, it can re-test in later months or quarters, but will only be
eligible for the JobKeeper payments from the period of qualification onwards
(the payment won’t be backdated to the commencement of scheme).
why we have emphasised to our counting clients that keeping our fingers on the
pulse and measuring the business very regularly is incredibly important.
The explanatory material that we have
received acknowledges that comparing monthly or quarterly periods from April
2020 and onwards, to April 2019 and onwards, may not always be possible or made
lead to unfair outcomes.
To this end, where the ATO is satisfied
that there is no such comparison period in 2019, or there is not an appropriate
relevant comparison period, the ATO Commissioner may, by legislative
instrument, determine an alternative decline in turnover test.
So this is not the end to the adjustments
or change to this legislation we may see. Many micro businesses that support
people on small incomes could fall below the radar, there is an incredibly
unfair disadvantage to people who are bankrupt betrayed under an ABN that we will
take to the government and so if we find
any case that’s unusual Your Business Angels won’t just pointed the legislation
we will pick up the case and fight like hell.
The two alternative test examples cited in
the explanatory materials we have been working through relate to:
• Businesses that were not in existence for the whole of the comparison period in 2019. In the explanatory materials, the business is permitted to average its actual turnover from October 2019 when it came into existence to March 2020, and compare that average it to its estimated turnover in April 2020.
• Businesses that were impacted by a natural disaster during the 2019 comparison period. In the explanatory materials, the business is permitted to go back to 2017 (the most recent year when its turnover was not impacted by drought) and compare its turnover to the same eligible period in 2020.
The Commissioner retains flexibility to
apply other alternative tests and take into account other unique circumstances
(aside from natural disaster and start-up businesses) confronted by a business,
should the 2019 comparison period not be reflective of typical turnover.
Treasury, in a separate fact sheet
Supporting Business to Retain Jobs, has stated that these alternative tests may
include, for example, eligibility being established as soon as a business
ceases or where a business significantly curtails its operations.
As we understand The Australian Taxation
Office is open to hear conversations from us regarding unusual circumstances or
we believe the legislation is not just to support someone who really should
receive Jobkeeper funding.
Stay tuned, work with your client
coordinator it will change and there may be more help in many other ways coming
from federal and state governments as we move through time.