While the initial rush to apply for JobKeeper has subsided, there are still plenty of business owners unclear about their month-to-month obligations to the ATO if they wish to continue qualifying.
Now that the main panic over applying for JobKeeper is over, accountants and BAS agents are being approached by anxious business owners and employers to confirm what their month-to-month obligations to the Australian Taxation Office (ATO) are to continue to qualify for JobKeeper payments.
There’s also some confusion over GST turnover and its application to the payments received by the ATO.
In this article, I would like to address a number of the more commonly asked questions being raised. Specifically, they are:
- How do I perform a projected GST Turnover test?
- Is the projected GST Turnover Accrual or Cash based?
- What if there is a difference between what I project and my Business Activity Statements?
- Do I need to perform the turnover test for JobKeeper every month?
- Do I need to apply GST to any payments I receive from the Australian Taxation Office?
- What if I get it all wrong?
Who is eligible for JobKeeper?
- Australian not-for-profit registered agencies with turnover of 15 percent or more
- Large businesses with an aggregated turnover of $1 billion or more needs to decrease by 50 percent or more
- All other entities need to show a decline of 30 percent or more to qualify
How do you perform a turnover test?
Turnover tests describe the methods the ATO use to determine eligibility based on business earnings.
There are a number of different tests that can be applied based on your situation. They are:
- Basic Test
- Alternative Test
- Modified Alternative Test
Refer to the Applying the Turnover Test on the ATO website.
This is a comparison between two test periods of time to a benchmarking period, which could be any calendar month from 30th March to 1 October 2020. Or it could be any quarter from 1 April to 1 July 2020.
The comparison period needs to be the corresponding previous 2019 period.
As an example: Compare April 2019 with April 2020 to show a decrease in turnover percentage.
The test is performed once to qualify after the month of 30 March 2020 irrespective of how you lodge your Business Activity Statement monthly or quarterly.
The alternative test is applied when the business has not been in business for a year or the previous turnover does not qualify due to drought or fire.
The Tax Commissioner may request further information to qualify.
Modified Alternative Test
In some cases, such as if you are a labour hire company, you may not qualify with the standardised Basic Test.
The ATO has provided an alternative process that takes your circumstances into account, so that you still qualify for Jobkeeper.
Please refer to the ATO webite for step-by-step details.
How do I perform a projected GST Turnover test?
It is calculated on all supplies that an entity has made and is likely to make during the set period of time. It entails:
- All GST Supplies.
- You need to make an objective assessment of your business including business plans, current budgets forecasts and existing customer agreements.
- EXCLUDE any other input tax or other supplies that do not include gst such as residential rent or international supplies.
- ACNC-registered charities have a special condition where they must include gifts or donations that might be received. This includes property over $5000 or Australian listed shares.
- Residential Developers need to include Margin Schemes
- Supplies between associates (check the GST Act to ensure that these are included)
- Out of scope income (Charities that have donations for example)
- Input taxed suppliers should all be excluded
- Identify GST-free supplies
- Barter Supplies will need to be included
What if I am not registered for GST?
If you are a small business turning over less than $75,000 or a not for profit turning over under $150,000 you may not be registered for GST. This however does not mean you do not qualify for Jobkeeper.
Please click on the link embedded below and look under the heading calculating for turnover.
You can apply the basic test even if you are not registered for GST.
See also the ATO community noticeboard: Answered Jobkeeper not registered.
Is the projected GST Turnover Accrual or Cash-based?
The ATO have since confirmed the following:
“As a practical matter, we accept that you may use either a cash or accruals basis to work out your turnover. However, you must use the same method for both periods. We expect that you will normally use the same method as you use for GST.”
See Eligible Employers on the ATO website for more information.
What if there is a difference between what I project and my Business Activity Statements (BAS)?
Do not rely on your Business Activity Statement figures for this test, as the GST turnover test is an inclusive figure and may not match up with your BAS figures for the same period.
Do I need to perform the turnover test for JobKeeper every month?
Keep a record of your comparative month to month figures, as it is stated in the Jobkeeper requirements that you can qualify once, but ongoing month to month records are required to be kept. (When applying the turnover test, there are ongoing monthly reporting requirements)
Do I need to apply GST to JobKeeper payments I receive?
No, the JobKeeper payment is not subject to GST.
What if I get it wrong?
When you submitted your GST Turnover projection on 20 April 2020 and you qualified the test, but now discover in May that you actually turned over more… You will technically still qualify.
You need to keep the data that shows how you obtained the projection, as the ATO may question your submission when you complete your next Business Activity Statement.
Getting the projection wrong in hindsight should not affect your JobKeeper payments.