Alternate methods of testing eligibility for JobKeeper Payments

The Government has released legislation outlining alternative eligibility tests for its JobKeeper wage subsidy payments.

What are the implications for your JobKeeper eligibility?

The alternative test, grants businesses different ways of proving the 30% downturn, potentially opening the wage subsidy up to a new group of businesses, who were not previously eligible.

When the JobKeeper package was announced at the end of March, the government said businesses would be eligible if they have seen a 30% drop in turnover because of COVID-19.

Over the following days, it became clear, that this revenue drop would be calculated based on a comparative period, 12 months ago.

The ATO has now said a business can nominate either a monthly or quarterly turnover period, and compare that period to 2019.

But, for many businesses, including startups, a year-on-year comparison just does not make sense.

If a business is less than 12 months old, eg, it just will not have revenue figures from a year ago. And, high-growth businesses could very likely have seen turnover drop, but still be reporting figures higher than they were this time last year.

At the same time, many businesses were affected by drought this time last year, skewing their figures. Others could have made big changes to the businesses, making comparing March 2019 to March 2020 a meaningless exercise.

Treasury did promise alternative tests for businesses in situations like these, or those that had highly variable revenues. But, even as the JobKeeper applications opened earlier this week, there was no clarification as to what these tests would be, or how they would work.

Now, finally, we have an idea.

These new rules outline the scenarios in which a business might be able to apply alternative turnover tests, and what those tests will be.

They cover new businesses, high-growth businesses, sole traders who have taken leave, and more.

There are seven circumstances where an alternative test would apply including:

  • You commenced business after the relevant comparison period eg Start-ups who may be less than a year old and would not have revenue figures from a year ago to compare to.
  • You acquired or disposed of part of your business after the relevant comparison period – ie the business is not the same business in that period as it is now.
  • You undertook a restructure after the relevant comparison period – ie the business is not the same business in that period as it is now.
  • Your turnover substantially increased by: 50% or more in the 12 months immediately before the applicable turnover test period; 25% or more in the 6 months immediately before the applicable turnover test period; 12.5% or more in the 3 months immediately before the applicable turnover test period.
  • Your business was affected by drought or other declared natural disasters during the relevant comparison period.
  • Your business has a large irregular variance in its turnover for the quarters ending in the 12 months before the applicable turnover test period (this excludes businesses that have cyclical or seasonal variance in their turnover).
  • If you are a sole trader or part of a small partnership where sickness, injury or leave has impacted your ability to work which has, in turn, affected your turnover.

If any of these circumstances apply, an alternative test needs to be made.

Please contact us if you require assistance. Each business needs careful analysis.

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