The alternative decline in turnover test for JobKeeper fortnights from 28 September onwards has been released by the ATO.
The new alternative tests are in line with the original covering the 7 circumstances outside the usual business operation that resulted in your 2019 relevant comparison period not being appropriate for applying the basic decline in turnover test.
This includes the following:
- Business that started after the comparison period
- Business acquisition or disposal that changed the entity’s turnover
- Business restructure that changed the entity’s turnover
- Business that has had a substantial increase in turnover
- Business affected by drought or natural disaster
- Business that has an irregular turnover
- Sole trader or small partnership with sickness, injury or leave
Below are some of the key changes that you should take into consideration when applying the appropriate tests
- The alternative test is now based on the actual GST turnover rather than projected GST turnover, which is in line with the basic decline in turnover test for the JobKeeper extension from 28 September.
- Turnover comparison method
- For entities that are registered for GST, the method used for calculating the turnover will need to be in line with their GST registration (i.e. cash or accruals)
- For entities that are not registered for GST, the entity can elect the method used for calculating the turnover; however, a consistent approach will need to be taken.
- Entities that experienced a substantial increase in their current GST turnover will now be able to choose between using the period immediately before the turnover test period or before 1 March 2020.
- Similarly, with the irregular turnover test, a choice is now available using the period immediately before the applicable turnover test period or before 1 March 2020.
- The new alternative test removes the requirement for entities with multiple acquisitions, disposals and restructures to use the period after the last of the sequential transactions. The changes allow an entity that has had multiple acquisitions, disposals or a sequence of restructure transactions at or after the start of the relevant comparison period but before the applicable turnover test period to apply these tests to each acquisition, disposal or restructure separately.
- The test for sole traders or partnerships affected by not working for all or part of that period due to sickness, injury or leave can apply the current GST turnover for the month immediately before the month in which the sole trader or partner did not work, rather than the turnover for the month immediately after the month in which they returned to work.
As with the previous alternative test or the basic decline in turnover tests, you will need to maintain sufficient and appropriate documentation on how the tests have been applied in case of an ATO review.
Please feel free to contact the team at MGI South Queensland if you wish you to discuss the application of the alternative test to your circumstances.
