The ATO has just released Alternative Tests for the JobKeeper payment which expands eligibility from the initial basic test.
This is good news for many businesses, particularly startups, those affected by last year’s droughts and those with variable revenues.
If you satisfy the eligibility requirements for the basic test, you can ignore the alternative tests below.
The basic test is satisfied where your projected GST turnover for the period falls short of your current GST turnover for the relevant comparison period, by the specified percentage (generally 30%). We can help you work this out.
If you don’t meet that test, you may be eligible for the alternative tests below.
Alternative Test 1 – If your business is less than 12 months old
This test applies to businesses established less than a year ago. They would not be able to meet the basic test as they cannot show a decline in turnover year-on-year.
If you started your business before 1 March 2020 and you don’t have the financials to compare against for the same period in 2019, there are some options for you.
You can use:
- Your average monthly current GST turnover, or
- Your 3 months current GST turnover if you started before 1 December 2019.
There are some calculations to do depending on which period you’re using. We can help with this.
Things to consider
If your business qualified for the ATO’s 2019-20 bushfire lodgement and payment deferrals, or received any drought help concessions, then you should exclude the months covered by those from your calculations.
But, if those were the only months you have been in business, you can disregard that, and include them all the same.
Alternative Test 2 – If turnover has changed significantly due to acquisition or disposal
A year-on-year comparison doesn’t make sense for a business that went through an acquisition or disposal process between this time last year and now. These businesses can use their current GST turnover for a month.
Business owners in this situation should use the month directly following the acquisition, disposal or restructure as the comparison period.
Alternative Test 3 – If turnover has changed significantly due to a restructure
Similar to the above alternative test, if a business went through a restructure between this time last year and now, they can use their current GST turnover for a month.
Essentially, if your business is not the same business in that period as it is now, you should use the month directly following the restructure as the comparison period.
Alternative Test 4 – If your business has seen substantial growth
This provision is for businesses that saw high-growth in the last 12 months, but have still suffered a decrease because of COVID-19.
If your business’ turnover grew significantly by:
- 50% over the last 12 months, or
- 25% over the last 6 months, or
- 12.5% over the last 3 months,
You can use your 3 months current GST turnover.
Alternative Test 5 – If your business has been affected by drought or natural disaster
If you conducted business in a declared drought or natural disaster zone, which affected your turnover, you can use your turnover for the same period a year earlier (ie. 2018 instead of 2019).
This enables a more accurate view of the effect the virus has had on the business.
Alternative Test 6 – If your business has irregular turnover
If your business’ turnover is not considered cyclical, you can apply for this test. Businesses will have to prove a significant difference in quarterly turnover.
Your business is eligible if:
- Your turnover in the lowest quarter in the last 12 months is 50% or less of your best quarter in the last 12 months, and
- Your business isn’t considered cyclical.
A business can calculate an average monthly GST turnover for the 12 months leading up to the test period.
Again, there are some calculations to do which we are happy to help with.
Alternative Test 7 – If sole trader or small partnership has been affected by sickness, injury or leave
This provision is for a sole trader or partnership and with no employees, where you or at least one of the partners couldn’t work for all or part of the comparison period in 2019. This test applies if that leave caused a negative impact on your turnover.
These businesses can use their current GST turnover for a month. Take the month immediately following the individual’s return to work, and use this as the comparison period.
Got any questions?
We encourage you to read through the details we have provided. If you have any questions please get in touch with us. We appreciate your patience as we are working through JobKeeper and other government programs.