Is the turnover test based on Net Profit
No, it is based on GST Turnover. Net profit is your sales less expenses, however GST turnover is in essentially your sales amount plus sales likely to be made in a test period less some specific exclusions.
A sole trader has an ABN but has never lodged a BAS because it is not registered for GST and does not deduct PAYG withholding. Can the entity claim JobKeeper for the owner of the business?
First, it should be remembered that only one JobKeeper payment can be claimed for one individual. If the individual has another source of income, other than the business, the JobKeeper payment may have been claimed for the individual by another entity.
It will be assumed that the entity had an ABN on 12 March 2020.
The fact that a business has not lodged a BAS does not prevent it from satisfying the decline in turnover test. This is due to the way that the “projected GST turnover” and “current GST turnover” have been defined. The ATO also says “The amounts included in calculating projected GST turnover and current GST turnover are the same regardless of whether you are currently GST registered”.
On the assumption that the individual satisfies all of the requirements, including being actively engaged in the business, there can be a claim for JobKeeper provided the individual has lodged his/her income tax return for the year ended 30 June 2019 that includes assessable income from the business. The tax return would need to have been lodged by 12 March 2020, or a later time allowed by the commissioner. We do not know whether the commissioner will allow a later time in relation to the JobKeeper scheme. There are statements in the ATO information concerning the cash flow boost that if a tax return is lodged late due to an approved deferral with the ATO, the ATO will accept the late lodgement for the purposes of the cash flow boost. We do not know whether the ATO will adopt the same attitude for the JobKeeper scheme.
Is a sole trader with no employees eligible for JobSeeker, JobKeeper and the Cash Flow Boost?
JobSeeker: Yes, but not if the employee is receiving JobKeeper payments.
Previously if a sole trader was trying to access income support payments they had to be willing to seek, and be available to take up, alternative work which effectively would have required them to close their business. These mutual obligation requirements will be temporarily removed to allow sole traders to continue operating and receive the JobSeeker Payment if they are eligible to do so. A sole trader who is eligible for a payment can meet their mutual obligation requirements during this period by continuing to sustain their business. Income testing will apply consistent with current arrangements. So, the level of support a sole trader will receive will depend on their ongoing income and that of their partner, if they are in a relationship.
An “eligible business participant” who is involved in the daily running of the business can be nominated to receive JobKeeper assistance provided they meet the eligibility criteria. However please note:
- Only one person can be nominated.
- if a sole trader starts to receive the JobKeeper Payment they will need to notify Services Australia as this will impact their eligibility to JobSeeker assistance.
Cash Flow Boost: No
The cash flow boost assistance is only available to businesses with employees.
What happens if a business is unsure about whether it will have a 30% decline in turnover for the June 2020 quarter in April and May 2020, but realises that it will have such a decline on say, 10 June 2020? Can it still enter the JobKeeper scheme? Can it (legally) back-date its involvement to 30 March 2020?
The JobKeeper scheme operates prospectively only (except for transitional provisions for the first two fortnights). The scheme operates in respect of JobKeeper fortnights. If an employer comes to the conclusion on 10 June 2020 that it is going to have a greater than 30% decline in turnover and satisfies all of the requirements of the JobKeeper scheme, it will be entitled to JobKeeper payments for the JobKeeper fortnight ending 21 June 2020 and following.
Its assumed that because you have closed your doors you are automatically eligible
No, the turnover tests must be satisfied
A business owner has ceased trading for a time due the coronavirus. He is not employed by his business. On 3 April 2020, he decides to get a job to supplement his income but will quit his job and return to his business when the economy recovers. Can he get the JobKeeper payment?
If he wants to be treated as an “eligible business participant” in relation to his business, he will need to continue to be actively engaged in the business. Will his new job commitments enable him to do this? This is a question of fact. The policy is that the individual will try to keep running his business, if that is permitted.
Note that he will not be able to obtain the JobKeeper payment from his new employer because he was not employed as 1 March 2020 with that employer. Also, the business owner will not be open to claim the JobKeeper payment in relation to his own business if he is employed as a full-time or part-time employee with his new employer. The JobKeeper payment may only be claimed by his own business if he is a casual employee of this employer.
Is a business that receives the 50% wage subsidy for apprentices and trainees also eligible for JobKeeper in relation to the apprentice or trainee?
(From Treasury information) “Eligible small businesses can receive the 50% wage subsidy for apprentices and trainees in the Supporting Apprentices and Trainees measure from 1 January to 31 March 2020, and the JobKeeper Payment. Where small businesses receive the JobKeeper Payment, they are not eligible to receive the apprentice and trainee wage subsidy from 1 April 2020 onwards”. It is noted that this is not referred in the JobKeeper Rules.
Normally, a business pays one of its employees $800 per fortnight. What must it do under JobKeeper? If the business pays them $1,500, can the business ask the employee to work extra hours or assume other duties?
If the employee is eligible, the employer must pay the employee $1,500 per fortnight, before tax, while JobKeeper is in operation. Further, it is the intention of the Government to require the employer to contribute 9.5% of $800 to the employee’s superannuation fund. The changes needed to the superannuation law requiring this have not yet been enacted.
Tax & Super Australia does not comment on employment law requirements. Please see the above discussion regarding amendments to the Fair Work Act.
Can a business cancel its involvement with the JobKeeper program if an election has been made?
If a business elects to be involved in the JobKeeper scheme because it projects that its turnover will fall by more than 30%, what happens if the fall in turnover turns out to be something less than this?
The answer to this is not entirely clear. The ATO needs to give specific information about this.
What we can say is that the Payments and Benefits Act contains a number of provisions that deals with over payments of the JobKeeper payments. The entity will need to repay the amount and also be charged General Interest Charge.
We note that there is not a general discretion given to the Commissioner in relation to the calculation of the 30% downturn. The Commissioner is given the power to make legislative instruments about this requirement. There is nothing that refers to “honest mistakes or inadvertent errors” as is found in some other legislation.
Sections 9, 10, 11 of the Payments and Benefits Act
If a business has both business income and passive income (e.g. interest and dividends) is the passive income taken into account when calculating the decline in turnover test?
No. The passive income is very likely to be input taxed income. Input taxed income is not taken into account when undertaking the decline in turnover test. It is specifically excluded from the definitions of “projected GST turnover” and “current GST turnover”.
Can a business be eligible for both the cash flow boost and JobKeeper?
Are employees who have returned from maternity leave eligible for JobKeeper assistance, even if there is no actual work for the employee to do?
Yes, provided they meet the “eligible employees” tests. Also note that employees who are currently on maternity leave with paid parental leave from their employer are also eligible for JobKeeper assistance. However if the employee receives paid parental leave or dad and partner pay under the Paid Parental Leave Act 2010 and the person’s paid parental leave period overlaps with or includes a fortnight in respect of which a JobKeeper payment may be paid, the person is not an eligible employee for JobKeeper for that fortnight.
Is a casual employee who has been with the organisation more than one year, but opted not to work due to COVID-19, eligible for JobKeeper assistance?”
If the employee’s decision not to work meant that they had terminated their employment: No Only a person who has been stood down or is on leave is considered to be an employee of their employer for the purposes of the JobKeeper payment. However, if the employee was on an approved absence from the organisation due to their concern about contracting COVID-19, but were still an employee of the organisation as at 1 March 2020 and satisfied the other “eligible employees” tests then: Yes
If a business does not satisfy the decline in turnover test at the start of the JobKeeper scheme, but does satisfy the test in a later test period, can the business apply for JobKeeper assistance from that later period?
Yes, if an entity does not qualify for, say, the month of April 2020 because its turnover has not been sufficiently affected, it can test in later months to determine if the test is met. This allows entities that only become affected part way through the six-month period of operation of the JobKeeper scheme to continue to monitor for any decline in turnover until they qualify for the scheme in a later period. Also, if the business does not think it will have a sufficient decline in turnover for the month of April 2020, it can also undertake the test in relation to the June 2020 quarter. This can be done whether the business lodges its activity statements on a monthly or quarterly basis.
Once an entity satisfies the decline in turnover test does it need to retest its turnover in later months?
If a casual reaches 12 months service in April, can they qualify for the Job Keeper then?
No, the employee must meet the “eligible employee” tests as at 1 March 2020.