Step 1 - Register your interest
To ensure you are kept up to date with the most recent information for the JobKeeper payment, ensure you register your interest via the ATO website. We understand most businesses have completed this step already, but if not, you can still register your interest via the ATO website here. https://www.ato.gov.au/Job-keeper-payment/
After you have registered your interest with the ATO to participate, if you require any assistance to complete the application form after 20 April 2020, please contact your Lowe Lippmann advisor.
Step 2 - Check You & Your Employees are Eligible
We have previously outlined in detail the requirements to determine if your business is an Eligible Employer and if your staff are Eligible Employees - details of these definitions have been explained in our previous Tax Alert.
Other entities can be eligible for the JobKeeper payment if they are not an employer. The entities and the one associated individual that could be eligible include:
- Sole trader-the individual must be the entity
- Partnership-the individual must be a partner in the partnership
- Trust-the individual must be an adult beneficiary of the trust
- Company-either a director or shareholder in the company
How do you determine a "decline in turnover"?
Firstly we must note, whilst a business must satisfy the decline in turnover test in order to be entitled to a JobKeeper Payment, once it is satisfied, there is no requirement to retest in later JobKeeper Payment fortnights. In other words, the "decline in turnover test" only needs to be satisfied once.
To work out your decline in turnover, you can compare either:
* your actual GST turnover for March 2020 with your GST turnover for March 2019;
* your projected GST turnover for a relevant month in 2020 (between April & September) with your GST turnover for that month in 2019; or
* your projected GST turnover for a relevant quarter in 2020 (quarters starting April 2020 or July 2020) with your GST turnover for that quarter in 2019.
How you choose to project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS, though you can do that if it is easier. You may meet the "decline in turnover test" if your turnover has declined by 30% or 50% (dependent on your aggregated turnover).
The term "turnover" (in this test) needs to take into account the total value of all supplies made, or are likely to be made, by the entity during that period (ie. month or quarter), excluding input taxed supplies (ie. passive rental income), supplies that are not for consideration, supplies that are not made in connection with the enterprise that the entity carries on, and supplies that are not connected to Australia (ie. made and completed outside of Australia).
We note that it is ultimately up to each business to self-assess whether it satisfies the decline in turnover test. In most cases, businesses will be required to make a reasonable estimate of their turnover for a month or a quarter. To assist with this process, the ATO (according to Treasury) will be providing guidance in this regard shortly.
In the meantime, we recommend that it would be prudent for businesses to start collating relevant information (ie. interim accounts, monthly sales reports and prior year BASs) to get ready for comparison calculations. If you require any assistance to start collating the relevant information, please contact your Lowe Lippmann advisor.
If you don't have a relevant comparison period in the 2019 year (for example your business has only recently started trading), the Commissioner can apply an "alternative test" to satisfy the "decline in turnover test", and we have explained this concept in a previous Tax Alert.
Eligibility for the JobKeeper payment commences at the start of a JobKeeper fortnight. To ensure you receive a payment for a fortnight, you need to ensure you have applied for the scheme prior to that fortnight as payments will not be made retrospectively. Note there is an exception for the month of April 2020 (see more at Step 3 below).