ATO legislative instrument on JobKeeper alternative test
24 April 2020
On 23 April 2020, a legislative instrument ‘Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020’ was registered by the ATO, which facilitates an alternative test for decline in turnover for a class of entities where there is no appropriate relevant comparison period.
This instrument is relevant because to access JobKeeper payments, entities must satisfy a ‘turnover’ test, which shows their revenue has declined by at least 30% (if their aggregated turnover is less than $1 billion), 50% (if their annual turnover is $1 billion or more) relative to a comparable period or 15% if an ACNC-registered charity.
The legislative instrument contains detail on alternative tests for seven classes of entities, outlined below.
Specific alternative tests
The ATO has determined alternative tests for decline in turnover for classes of entities where there is not an appropriate relevant comparison period (note - if an entity satisfies the basic test it does not need to go to an alternative test determined by the ATO). Additionally, employers need only satisfy one of the alternative tests. Employers who rely on one of the alternative tests can self-assess their eligibility and do not need to apply to the ATO for confirmation.
Circumstances where an alternative test applies:
- the entity commenced business after the relevant comparison period (the business did not exist in that period)
- the entity acquired or disposed of part of the business after the relevant comparison period (the business is not the same business in that period as it is now)
- the entity undertook a restructure after the relevant comparison period (the business is not the same business in that period as it is now)
- the entity’s turnover substantially increased by:
- 50% or more in the 12 months immediately before the applicable turnover test period; or
- 25% or more in the 6 months immediately before the applicable turnover test period, or
- 12.5% or more in the 3 months immediately before the applicable turnover test period.
- the entity was affected by drought or other declared natural disaster during the relevant comparison period
- the entity has a large irregular variance in their turnover for the quarters ending in the 12 months before the applicable turnover test period, excluding entities that have cyclical or regular seasonal variance in their turnover, or
- the entity is a sole trader or small partnership where sickness, injury or leave have impacted an individual’s ability to work which has affected turnover.
The initial deadline for employers to enrol themselves for the JobKeeper program and to pay their employees for the first two fortnights (30 March to 12 April and 13 April to 26 April) has also been extended by the ATO from Sunday 26 April 2020 to Sunday 31 May 2020.
Contact BDO for assistance with determining eligibility for JobKeeper payments including turnover calculations, applying the alternative test where appropriate, identification of eligible employees, enrolment with the ATO and ongoing reporting requirements including reconfirming the eligibility of employees.
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