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Technical Update:

ATO confirms NDIS income is included in turnover test for JobKeeper Payment Scheme

21 May 2020

On 14 May 2020, the National Disability Services published a document in which the Australian Taxation Office confirms that payments to charities for providing National Disability Insurance Scheme services are not ‘government income’ and therefore cannot be excluded when calculating their turnover for the purposes of the JobKeeper Payment Scheme.

JobKeeper Payment Scheme

On 30 March 2020, the Government announced a new wage subsidy plan, the JobKeeper Payment Scheme, available from 30 March 2020 until 27 September 2020, to support businesses affected by the economic impact of the coronavirus (COVID-19) by assisting them to retain employees.

Employers can choose to participate in the JobKeeper Payment Scheme and then nominate all the employees they are entitled to claim for. Eligible businesses that elect to participate will receive a payment of $1,500 per fortnight per eligible employee. An employee will be eligible if at 1 March 2020 they were employed (including those stood down or re-hired) as either a permanent full-time/part-time or long-term casual employee and were at least 16 years of age, an Australian resident and not in receipt of excluded payments.

Businesses must have paid their employees before they are entitled to receive the JobKeeper payment. Not-for-profit (NFP) entities including charities that are registered with the Australian Charities and Not-for-profits Commission (ACNC) are eligible to apply for the JobKeeper Payment Scheme.

Charities and NFPs

NFPs (excluding charities) will be eligible for the JobKeeper Payment if, at the time of applying:

  • they have an aggregated turnover of less than $1 billion (for income tax purposes) and they estimate their GST turnover has fallen or will likely fall by 30 per cent or more; or
  • they have an aggregated turnover of $1 billion or more (for income tax purposes) and they estimate their GST turnover has fallen or will fall by 50 per cent or more.

Charities registered with the ACNC will be eligible for the JobKeeper payment if they estimate their turnover has or will likely fall by 15 per cent or more relative to a comparable period. This lower turnover decline test does not apply to universities and non-government schools that are registered charities, who will remain subject to the turnover decline tests set out above for other NFPs.

If a NFP does not have an appropriate relevant comparison period for the purpose of assessing a decline in turnover there are several alternative turnover tests that may apply. Information on the JobKeeper Payment Scheme for charities is available on the Treasury website here.

Amendments to turnover test for charities

On 24 April 2020, a legislative instrument was registered with amendments to the JobKeeper Payment Scheme allowing charities (other than schools and universities) to elect to exclude government revenue from the JobKeeper turnover test. The amendment ensure that the eligibility of charities is not adversely affected where they are delivering significant services that are funded by government.

Charities that employ staff and receive government revenue may use either their total turnover, or elect to use their turnover excluding government revenue, for the purposes of assessing eligibility for the JobKeeper Payment. If the JobKeeper turnover test is satisfied a charity must nominate all of its eligible employees, but if they elect to exclude ‘government revenue’ they can choose to exclude those employees who are ‘fully funded’ by that ‘government revenue’.

According to Treasury’s FAQs on the JobKeeper Payment Scheme, “government revenue is any consideration received for a supply made to an Australian government agency, local governing body, the United Nations or an agency of the United Nations”. Law Companion Ruling LCR 2020/1 confirms that government grants that are received as consideration for a taxable supply should be included in calculations for projected GST turnover and current GST turnover.

National Disability Insurance Scheme (NDIS) income

On 14 May 2020, the National Disability Services (NDS) published a document with Australian Taxation Office (ATO) FAQs on the JobKeeper Payment Scheme for NDIS Providers. According to the document when a NDIS participant selects the National Disability Insurance Agency (NDIA) to manage their plan and pay for their support, these payments are made from the participant’s NDIS funds to the provider. These payments are not payments provided by an Australian government agency. This means that these payments cannot be disregarded from the JobKeeper turnover because the consideration for the supplies made by the provider (an ACNC registered charity) to participants is not provided by an Australian government agency.

Similarly, when an NDIS participant chooses to self-manage their own funding or chooses another Plan Manager (other than the NDIA) to pay a provider (an ACNC registered charity), on their behalf, these payments cannot be disregarded from the JobKeeper turnover. If the provider is not an ACNC registered charity then no amounts can be disregarded and should be included in calculations of projected GST turnover and current GST turnover. A charity cannot choose to exclude those employees who are ‘fully funded’ by NDIS income from the JobKeeper Payment Scheme. 

NDIS providers with multiple operations

If NDIS providers operate multiple business units within the same legal entity and under the one ABN, activities from all these business units must be taken into account as part of the overall legal entity’s GST turnover. Separate sites operating under the one ABN should also be assessed as part of the overall entity’s activities to assess eligibility for the JobKeeper payments.

It is also important to note that on 1 May 2020, a legislative instrument was registered introducing a modified decline in turnover test for use by groups where an operating business which has suffered a decline in turnover is conducted in a different legal entity to the employer entity, which cannot otherwise show the requisite fall in turnover.

BDO Comment

Employers have until 31 May 2020 to enrol for the JobKeeper Payment Scheme for the April and May payments to employees. All employers need to determine if their business is eligible, identify and notify eligible employees in writing that they are entitled to JobKeeper payments, make payments to employees and commence making monthly declarations. There are complex rules around all these matters. Contact your local BDO adviser for assistance.