How can the decline in turnover test be based on the information given in the BAS where we declare our sales on a cash basis for GST purposes and the government wants us to use accruals basis?
Under the current JobKeeper rules, there is no compulsion for a business that is lodging BASs on a cash basis to be forced to use the accruals basis.
How is the decline in turnover calculated if a client has lodged a BAS on an annual basis in the prior year and this year has lodged a BAS on a quarterly basis?
It is expected that the Legislative Instrument will have something that will cater for this situation. Presumably the client will be asked to take, for example, the April, May and June 2019 supplies and add them together as if a quarterly BAS had been lodged for that quarter.
My understanding is that GST turnover would include asset sales. Should these be included, or can they be left out?
Yes, the actual GST turnover does include the value of taxable supplies of assets.
This issue does confuse some people because in determining the projected GST turnover, you disregard supplies that are by way of transfer of ownership of a capital asset. Projected GST turnover will not be used for the decline in turnover test under JobKeeper 2.0.
Can two separate sole traders who are eligible business entities that are husband-and-wife both receive the JobKeeper?
If a business did not pass the basic test under JobKeeper 1.0 but subsequently passed the tests for JobKeeper 2.0, does the business qualify to claim JobKeeper from 28 September 2020?
If the business was not initially eligible for JobKeeper, it will not be eligible for JobKeeper 2.0. We note in the question that the business did not pass the “basic test”. Please ensure that the business does not pass the alternative decline in turnover test and thus make it eligible for JobKeeper.
Also, if a business satisfies the decline in turnover test in relation to either the June 2020 quarter or September 2020 quarter under JobKeeper 2.0, it will be virtually certain that the business will have satisfied the decline in turnover test for the current JobKeeper scheme in some manner.
Is the test for hours worked in February 2020, 20 hours in total or 20 hours per week?
The test determines whether the employee or eligible business participant worked 20+ hours a week (or not), on average, in the four weeks of pay period prior to 1 March 2020. The precise details of how this will be calculated will only be known when the Legislative Instrument is made.
If an eligible business participant is in a bushfire affected area in February 2020 and were evacuated and could not work as per usual, how does that affect the calculation of the average hours worked in that month?
This situation is specifically mentioned in the Treasury information. Although there are no specific details, it is said that there will be an alternative method of determining the average hours that such people have worked in February 2020. Very likely, another time period where the individual is working as normal will be used as a proxy for the work undertaken in February 2020.
What is the status of the cash flow boost after September 2020?
There has been no change to the cash flow boost as announced in March 2020. The first part of the cash flow boost should now have been received by eligible entities and instalments in relation to the second cash flow boost should now start to be flowing by way of credits on an entity’s account with the ATO.
In relation to the calculation of the hours worked in February 2020 for an eligible business participant, can the level of sales be used as a method to determine the number of hours that have been worked by that individual during that month if the individual is the only person in the business?
This is not currently known and will not be known until the relevant Legislative Instrument is made. We consider it unlikely that the level of sales will be used as a proxy for the amount of work that a person has undertaken, however, it is a possibility particularly where the sales are based on services provided.
How strict will the ATO be in targeting eligible business participants to justify the number of hours they have worked in February 2020?
The answer to this question is currently unknown. The JobKeeper Act requires that records be kept that can substantiate the information needed to qualify for the JobKeeper subsidy. When the applicable Legislative Instrument issues, there may be further information about this. However, we expect that the ATO will probably place information on its website or issue a law companion ruling/practical compliance guideline that will discuss the record keeping requirements and what compliance resources will be committed by the ATO to auditing this area. We trust that the ATO will continue to use a reasonable and commercial approach to the eligibility of businesses for JobKeeper.
When referring to the four weeks of pay period prior to 1 March 2020, is that a reference to the pay, per pay period, or the pay for the whole of the month?
Details of this are currently unknown. The inference we obtain is that there will be an examination of the pay periods applicable to an entity that cover the four weeks prior to 1 March 2020. We are unclear whether this refers to the whole weeks prior to 1 March 2020 all the weeks that immediately proceed that date.
We note that 1 March 2020 was a Sunday. It may be that for many employers the pay period finished on the prior Saturday and so the question of whole or part weeks may not arise. Nevertheless, we will not be able to resolve this until the Legislative Instrument is made.
How will sole traders be able to prove the number of hours they have worked in February 2020?
This is unknown but the ATO is aware of the issue and it is understood that rules will be developed to assist with this issue.
An employee worked full-time in a business prior to February 2020. In February 2020 the employee was on parental leave. After parental leave the individual is now working two days per week in the business. Will they be eligible for the top tier of JobKeeper payments under JobKeeper 2.0?
This will depend on how the alternative tests are framed in relation to the determination of whether the person has worked, on average, 20 hours per week in the four weeks prior to 1 March 2020. We suspect that you will be able to use the hours worked in January 2020 as a proxy for the hours worked in February 2020, but we will not know this until the applicable Legislative Instrument issues.
Can you give us a timetable for the JobKeeper 2.0 changes?
At the time of writing (29 July 2020), this is not possible. All that we currently know is that the new test for eligibility will need to be satisfied in advance of the date on which the September activity statements are due to be lodged. Also, we expect that the wage condition in relation to the JobKeeper subsidy will remain unchanged. That is, employees will need to be paid the $1,200/$750 in the JobKeeper fortnight in order to be eligible for the JobKeeper subsidy for the applicable employees.
With regard to an employee that has two jobs in February 2020, will both jobs be taken into account when determining the average hours that are worked for the four weeks prior to 1 March 2020?
The information from Treasury is that the only hours that will be counted for an individual are in relation to the work performed by the individual for the business that is seeking to claim the JobKeeper subsidy. That is, only the hours for one business will be counted.
If a taxpayer made an error in the June business activity statement turnover which may affect their eligibility for JobKeeper 2.0, is there any way to amend or would it be okay to support by paper records?
It is highly recommended that you amend the applicable BAS to ensure that the information is correct. No doubt, the ATO will be running integrity checks based on the information that has been submitted to it. If the information indicates that there has not been a sufficient decline in turnover, presumably it will cease to pay the JobKeeper subsidy.
Has the amount a partner can earn changed for JobSeeker?
Information from the Treasury says: “Partner income testing - the partner income test cut out will increase to $3,086.11 per fortnight, or $80,238.89 per annum, for individuals with no personal income, from 25 September 2020. The taper rate will increase from $0.25 - $0.27, with the higher income cut-out a result of changes to income testing for JobSeeker Payment. No one will be worse off under these temporary changes.”
What do you suggest can relieve the headaches from these changes?
Paracetamol and aspirin-based products are often recommended by medical professionals in relation to head pain.
Is it still too late to register for the JobKeeper due to a sudden decrease in turnover after 30 June 2020?
No, it is not too late. The business will only be able to claim JobKeeper for the fortnights after it has enrolled. Eligibility for the original JobKeeper subsidy will remain until the JobKeeper fortnight ending 27 September 2020.
Can more than one business participant be eligible for JobKeeper 2.0?
No, unless the Legislative Instrument makes this permissible. The announcement by the Government does not indicate that this will be the case.
If a business has an employee who was employed prior to 1 March 2020, but had not worked in the four weeks prior as they were employed on a casual basis and were not rostered on, is there an entitlement to JobKeeper if they commence work after 1 September 2020?
It must be the case that on 1 March 2020, the individual was considered to be a long-term casual. That will be a question of fact. If the employee was not rostered on during the month of February, there may be some difficulty in concluding that the employee was a long-term casual.
We assume that the Legislative Instrument applicable for the JobKeeper 2.0 changes will contain provisions that deal with employees that are employed on a casual basis for the purpose of determining the number of hours that have been worked in the four weeks prior to 1 March 2020.
The question implies that the JobKeeper subsidy has not been claimed for this employee to date. This suggests that there is something that has made this particular employee ineligible. If that is the case, the employee will remain ineligible. Alternatively, the employee may have had their employment terminated after 1 March 2020 and the employee is to be reinstated as at 1 September 2020. If that is the case, the JobKeeper subsidy should be able to be claimed from those fortnights in which the employee was re-employed.
For a sole trader client (for example an Uber Driver), they are currently receiving JobKeeper and will continue to do so until the end of September 2020. They will not have earned any income from this business since 1 April 2020. When determining the eligibility for JobKeeper 2.0, the client will have no income for the June 2020 quarter. Compared with the June 2019 quarter, there will be a 30% decrease in turnover. Is it correct that the client will be eligible for JobKeeper 2.0?
Yes. It will also be necessary to show that there has been a greater than 30% decline in turnover for the September 2020 quarter compared with the September 2019 quarter. This appears highly likely as you state that no income has been earned since 1 April 2020.
There is an issue that needs to be raised in relation to this question. If this individual is claiming as an eligible business participant, there is a requirement that the individual is actively engaged in the business in each JobKeeper fortnight. Why does the individual have nil income since 1 April 2020? Has the individual been actively engaged in conducting the business?
What happens when you have paid your employees JobKeeper payments from October 2020 and you realise that your turnover has not dropped by 30% for the December 2020 quarter when compared with the December 2019 quarter?
The business can validly claim the JobKeeper subsidy in relation to the JobKeeper fortnights between 28 September 2020 and 3 January 2021 if there has been a 30% decline in turnover in relation to the June 2020 and September 2020 quarters. The notion of projected GST turnover will no longer be applicable and therefore having a situation that results in there not being a decline in turnover of more than 30% in relation to the December 2020 quarter will not be relevant for the JobKeeper fortnights that end on 3 January 2021. This will be relevant for the JobKeeper fortnights that commence on 4 January 2021 and conclude on 28 March 2021.
How do we measure actual figures for the September 2020 quarter before the quarter actually ends? If the JobKeeper 2.0 period starts 28 September 2020, there is still a couple more days of actual income that could appear.
You have identified a very time sensitive piece of work that accountants, tax agents and BAS agents will be involved with. Unless the applicable Legislative Instrument provides otherwise, it will obviously not be possible to determine whether the decline in turnover test for actual supplies in the September 2020 quarter has occurred until that quarter ends. The first JobKeeper fortnight for JobKeeper 2.0 is from Monday, 28 September 2020 to Sunday, 11 October 2020. If the requirement to satisfy the wage condition in the JobKeeper fortnight continues, it will be necessary for a business to have determined that it has satisfied the decline in turnover between 1 October 2020 and 11 October 2020 (provided the ATO systems are operating on Sunday, 11 October 2020).
We trust that the ATO is acutely aware of the enormous amount of work that will need to be done in this very short timeframe and will administer the JobKeeper system in a reasonable manner. Standby for further ATO announcements.
I would like to confirm the JobKeeper payment received for a partnership/trust (assumed to be for an eligible business participant) should be included as the entity’s income. Please confirm that these amounts should not be considered as the eligible business participant’s personal income.
Yes. That is correct. Tax & Super Australia has conducted a webinar on this topic. Go here for the details: https://bit.ly/337K8nh .
A sole trader is currently not in Australia due to COVID-19 and, accordingly, the business turnover is nil. Can the sole trader apply for JobKeeper as an eligible business participant? Are there any time limits for the sole trader staying overseas but still being eligible for JobKeeper?
The fact that an eligible business participant is outside Australia does not necessarily preclude the business from claiming the JobKeeper subsidy in respect of that individual.
The business must have been carried on in Australia on 1 March 2020. That will be a question of fact. Also, on 1 March 2020 the individual must be an Australian resident (within the meaning of section 7 of the Social Security Act 1991) or was a resident of Australia for the purposes of the income tax law and was the holder of a special category visa (Subclass 444).
It must also be the case, for an eligible business participant, that the individual is actively engaged in the business at some time in each JobKeeper fortnight. If the income of the business is nil, you will need to be ready to provide evidence that the individual is actively engaged in the business.
The length of time that the individual spends overseas does not, of itself, have any immediate impact on the ability to claim the JobKeeper subsidy. However, while the individual remains overseas and the business is not deriving any income, there is an evidentiary issue in relation to proving that the individual is actively engaged in the business.
The question of whether an individual is actively engaged in a business is an objective test. That is, would an independent observer determine that the individual is actively engaged in the business. Unfortunately, there seems to be no allowance in the rules in relation to the situation where an individual is prevented from actively engaging in their business due to a reason that is beyond their control, including being stuck in an overseas location due to COVID-19. No discretion is given to the Commissioner of Taxation in this regard.