Only days before JobKeeper 1.0 ends and Jobkeeper 2.0 begins on the 28 September 2020. The new rules and the latest ATO guidance on alternative reference periods, timing of supplies made and the decline in turnover test, and when higher rates automatically apply.
Key points:
GST reporting method
When applying the new turnover reduction tests for the September 2020 quarter and December 2020 quarter, entities that are registered for GST must use the same method that is used for GST reporting purposes. That is, if the entity is registered for GST on a cash basis then a cash basis needs to be used to calculate current GST turnover for the purpose of these new tests. Entities that are not registered for GST can choose whether to calculate GST turnover using a cash or accruals basis, but must use a consistent method.
Current GST turnover
Current GST turnover is based on actual sales that have been made rather than an estimate / prediction of sales. Current GST turnover also includes proceeds from the sale of capital assets, unless the sale is input taxed. Current GST turnover includes taxable and GST-free supplies, but should exclude input taxed supplies such as residential rental income and financial supplies like dividends, interest etc. JobKeeper and ATO cash flow boost payments should be excluded from the calculation along with other payments that don’t represent consideration for a supply made by the entity.
Jobkeeper payment rates – alternative tests for the 80 hour requirement
If an individual did not work for at least 80 hours in the ‘standard’ reference periods for working out whether the higher or lower payment rate applies from 28 September 2020 onwards, it is necessary to determine whether this threshold could be satisfied in connection with some alternative reference periods. In broad terms, these are available if the employee’s total hours of work and paid leave in the standard reference periods were not representative of the total number of those hours in earlier periods; the individual was not employed during all or part of the standard reference periods; the first pay cycle ended after the reference time; or where an employee has been transferred to a new employer as part of a business sale. Similar rules apply to eligible business participants and religious practitioners.
Employees not tied to hours worked
Some employees will automatically qualify for the higher JobKeeper payment rate. Broadly, this applies if the employer has incomplete records of total hours of work and paid leave, including where salary, wages, commissions, bonuses etc are not tied to an hourly rate or contracted rate. The employee must also fall within specific categories, including where they were paid at least $1,500 in the reference period; they were required to work at least 80 hours under an industrial award, enterprise agreement or contract; or it is reasonable to assume that they worked at least 80 hours during the applicable period.
Wage condition extended to 31 October 2020
For the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 the ATO is allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme.
Alternative tests not yet available
The ATO has not yet released details of the alternative tests that will be used in determining whether certain entities can pass the new turnover reduction tests. The ATO has stated that these will be similar to the alternative tests that apply in connection with the original decline in turnover test, but further guidance will be published soon. The alternative tests have not been released as yet for the new decline in turnover tests (although the ATO have stated that they will be similar to the previous alternatives tests).
It’s important to talk to your accountant to make sure you get it right. Please call us now on 03 9836 2900 or email us at info@kidmanspartners.com.au.