Use this test if your entity temporarily ceased trading during part, or all, of the relevant comparison period in 2019 (ie. EP1: 1 July – 30 Sept 2019, or EP2: 1 Oct – 31 Dec 2019).
An entity can apply either of these two new Alternative tests (below) if all of the following conditions are met:
- the entity's business had temporarily ceased trading due to an event or circumstance outside the ordinary course of its business;
- trading temporarily ceased for a week or more;
- some or all of the relevant comparison period occurred during the time in which the entity's business had temporarily ceased trading; and
- the entity's business resumed trading before 28 September 2020.
Temporarily ceasing to trade includes where a business ceases to make supplies, or cannot otherwise offer its goods and services to customers. The entity is not required to completely stop carrying on business, but requires a suspension of the ordinary activities of the business while it is still carrying on business due to some event or circumstance outside the ordinary course of business.
We note that "ceasing trade" at the end of a business day, on weekends, public holidays or during the offseason of a seasonal business would not satisfy the requirement that ceasing trading is because of an event or circumstance outside the ordinary course of the entity's business, as these examples all form part of the ordinary course of the entity's business.
This Category 8 Alternative test will not generally apply where a business ceases trade because its sole trader or partner (in a small partnership) goes on planned leave for all or part of the relevant comparison period – as the Category 7 Alternative test should cover these circumstances.
You can use either Alternative Test 1 or Alternative Test 1 (below) if both are applicable to you.