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JobKeeper Decline in Turnover Test
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This spreadsheet will only work in Google Sheets. Go ->File->Make a copy to add your own figures in.
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DISCLAIMER: This is a guide to help you be able to determine your eligiblity for the JobKeeper Wage Subsidy. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances. The Bowdler's Tax is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this tool.
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Eligible Employers:https://www.ato.gov.au/general/jobkeeper-payment/employers/eligible-employers/
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Employers will be eligible for the JobKeeper payment if all of the following apply:
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>On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.
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>You employed at least one eligible employee on 1 March 2020.
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>Your eligible employees are currently employed by your business for the fortnights you claim for (including those who are stood down or re-hired). On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.
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>Your business has faced a:
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30% fall in turnover (for an aggregated turnover of $1 billion or less)
50% fall in turnover (for an aggregated turnover of more than $1 billion), or
15% fall in turnover (for ACNC-registered charities other than universities and schools).
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>Your business is not in one of the ineligible categories.
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BASIC TEST STEPShttps://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Applying-the-turnover-test/
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Step 1: Identify the turnover test period
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Choose whether you are comparing your monthly or quarterly turnover. You can choose to compare the relevant month or quarter, regardless of whether you report quarterly or monthly.
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For qualification from the start of the scheme, the turnover month used can be either March 2020 or April 2020. To qualify at a later time, the turnover month can also be May, June, July, August or September 2020, provided that the turnover month is the month in which the first fortnight for which you claim the JobKeeper payment ends, or another earlier month
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In other words, you will only be eligible for JobKeeper payments for JobKeeper fortnights that end on or after your turnover test period starts.
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Step 2: Identify the relevant comparison period
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This must be the same period in 2019 that corresponds to the turnover test period.
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There may be situations where the turnover in the corresponding period in 2019 does not provide an appropriate relevant comparison. In these situations, you will need to consider the alternative test.
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Step 3: Work out the relevant GST turnover
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You need to determine:
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> for the turnover test period – what your projected GST turnover will be
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> for the comparison period – what your current GST turnover was in 2019.
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Modifications to projected and current GST turnover
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Projected GST turnover and current GST turnover are defined in the GST Act but have been modified for JobKeeper purposes as explained below. The amounts included in calculating projected GST turnover and current GST turnover are the same regardless of whether you are currently GST registered.
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When calculating GST turnover for an entity that operates two or more businesses, the turnover from each business is combined. Entities that form part of a GST group or consolidated group must work out the projected GST turnover and current GST turnover and apply the fall in turnover test for each entity individually.
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There are four main modifications to the GST turnover calculation:
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> projected GST turnover and current GST turnover are calculated for the relevant month or quarter being tested (rather than for 12 months)
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> where an entity is part of a GST group, the entity calculates its GST turnover as if it wasn’t part of the group. This means that supplies made by one group member to another will be included in GST turnover for the purposes of the fall in turnover test
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> the calculation includes the receipt of tax deductible donations by a deductible gift recipient. It also includes gifts of money, property (with a market value of more than $5000) and listed Australian shares received by an ACNC-registered charity (that is not a deductible gift recipient). However, none of these receipts are included if they are from an associate, and
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> external Territories (e.g. Norfolk Island) are treated as if they formed part of the indirect tax zone (i.e. Australia).
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Projected GST turnover and current GST turnover excludes the following:
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> GST you included in sales to your customers (if any)
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> sales that are input taxed sales (e.g. bank interest, sale of shares, residential rental income)
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> sales not connected with an enterprise that you carry on (e.g. sale of private car)
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> sales that are not made for payment (unless a taxable supply to an associate)
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> payments for no supply (e.g. JobKeeper payments)
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> gifts and donations (except for deductible gift recipients and ACNC-registered charities as discussed above)
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> sales not connected with Australia, for example:
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> sales of services made through a business you carry on outside Australia
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> sales of goods purchased and sold from a place outside Australia
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> sale of real property situated outside Australia
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Cash or accruals basis
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You may use an accruals basis of accounting to calculate both the current GST turnover and projected GST turnover as both calculations require you to include sales that you have made or are likely to make without any reference to when you are paid.
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However, if you prepare your activity statements on a cash basis, the ATO will allow you to calculate both the current and projected GST turnovers on a cash basis. The basis used must be the same for calculating your projected and current GST turnover.
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Typically, current turnover will equal your GST exclusive sales less your input taxed supplies.
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Estimating your projected GST turnover
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You need to identify the sales you made, or are likely to make, during the turnover test period.
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Given that you can test eligibility part way through a period, when applying the fall in turnover test, you need to consider what you expect to happen for the remainder of that period. Relevant considerations include:
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> the period during which the business is not expected to trade because it has been closed due to the coronavirus, or its ability to trade has been restricted
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> recent patterns in trading that are expected to continue
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> revised business plans.
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The reasons for a fall or expected fall in turnover are not prescribed and are not limited only to the direct impacts of the coronavirus.
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A business may intend on making substantial changes to their structure and operations, as part of responding to the coronavirus. However, projected GST turnover excludes:
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> supplies that are made by transfer of capital assets
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> supplies that are made as a consequence of substantially and permanently reducing in size or scale the enterprise.
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A 10% reduction is generally accepted as a substantial reduction in size and scale (a smaller reduction may be substantial depending on the particular circumstances of the enterprise). The reduction will be permanent if it is enduring but not if it is reasonable to expect the reduction will end, for example in one or two years. This means that, for example, where an entity decides to close 1 out of its 10 stores in its business, the income from selling the store or the assets used in the store would be excluded when calculating projected GST turnover.
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This means that the turnover from structural changes may need to be excluded when calculating projected GST turnover.
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Step 4: determine which shortfall percentage applies
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Generally, the shortfall percentage will need to be 30% or more. However, for some ACNC-registered charities and large businesses the shortfall percentage is different.
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ACNC registered charity
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An ACNC-registered charity only needs to show a shortfall of 15% or more. This lower turnover test does not apply to universities and non-government schools that are registered charities. School is defined to mean an institution that provides pre-school courses, primary courses, secondary courses or special education courses.
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Government schools do not qualify for the JobKeeper scheme.
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Aggregated turnover tests for entities likely to exceed $1 billion
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Large businesses must show a shortfall percentage of 50% or more.
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For the purposes of determining if the 50% shortfall percentage applies, a large business is an entity that:
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>had an aggregated turnover of more than $1 billion in the previous income year to the income year in which the turnover test period occurs, or
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>is likely to have an aggregated turnover of more than $1 billion in the income year during which the turnover test period occurs.
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The aggregated turnover test is used to determine if a higher threshold applies to an entity that is not an ACNC-registered charity (other than a university or non-government school). The purpose of this is to ensure that smaller entities that form part of a larger group that have an aggregated turnover of more than $1 billion need to satisfy the 50% decline in turnover to qualify for the JobKeeper payment. Aggregated turnover is a defined term and has the meaning given by section 328-115 of the Income Tax Assessment Act 1997.
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Aggregated turnover includes:
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>the entity’s own annual turnover plus
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>the annual turnover of any entity that is connected with and/or is an affiliate of the test entity.
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The annual turnover for an income year is the total ordinary income that an entity derives, directly or indirectly from all sources, whether in or out of Australia, in the income year in the ordinary course of carrying on a business.
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You must apply the aggregation rules in Division 328 of ITAA 1997 to work out whether you need to add any other business entities annual turnover to your annual turnover to work out your aggregated turnover.
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The aggregated turnover of an entity is not necessarily the same as the turnover calculated for a consolidated or MEC group or the annual global income of a significant global entity.
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In working out aggregated turnover, if you are a foreign entity or a foreign entity is connected with you and/or is your affiliate, the annual turnover of that foreign entity needs to be included in your aggregated turnover.
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The calculation of aggregated turnover requires that you disregard any income from certain dealings with entities connected with or affiliated with you to avoid double counting. These entities may be part of the consolidated group, MEC group or a significant global entity. However, it may also include entities that are outside these groups.
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