With mere days to go before the end of an era (JobKeeper 1.0), J-Fry finally dropped the long-awaited legislation behind the Alternative Decline in Turnover Test Rules.
For the most part the alternative tests remain the same however there are some key changes to reflect the periods impacted by COVID-19.
The legislation can be accessed here (click link for a VERY dry read)
BEFORE WE GO TOO FAR, SOME NOTES
If the actual test applies, the alternative test are not relevant. If one of the alternative tests applies to you, then that is enough, you only need to satisfy one.
The alternative tests under JobKeeper 1.0 are referred to as "original decline in turnover test" and under JobKeeper 2.0, referred to as "actual decline in turnover tests".
*All alternate tests below are based on actual (current) GST turnover instead of projected GST turnover.*
THE STANDARD WAY IN
- The required fall in GST turnover percentages will remain the same – 30% for an aggregated turnover of $1 billion or less – 50% for an aggregated turnover of more than $1 billion – 15% for ACNC-registered charities other than universities and schools
- There are two rates (tiers) of payment - tier 1 and a tier 2
- Tier 1 rate for eligible employees who were working for 20 hours or more a week on average in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, and – eligible business participants who were actively engaged in the business for 20 hours or more per week on average during February 2020.
- Tier 2 rate applies for other eligible employees and business participants; those working under 20 hours.
- Employers and businesses will need to nominate the rate they are claiming for the eligible employees and/or eligible business participants.
Extension 1 – 28 September 2020 – 3 January 2021
- You will need to demonstrate that your actual GST turnover has fallen in the September 2020 quarter (July, August, September) relative to a comparable period (generally the corresponding quarter in 2019) – base test.
- Tier 1 is $1,200 per fortnight.
- Tier 2 is $750 per fortnight.
Extension 2 – 4 January 2021 – 28 March 2021
- You will need to demonstrate that your actual GST turnover has fallen in the December 2020 quarter (October, November, December) relative to a comparable period (generally the corresponding quarter in 2019) – base test.
- Tier 1 is $1,000 per fortnight.
- Tier 2 is $650 per fortnight.
WHY YOU MIGHT USE THE ALTERNATIVE TESTS
- You commenced business before 1 March 2020 but don't have a standard comparison period (New to Business)
- You have undergone a disposal, acquisition, or restructure
- You had a substantial increase in turnover
- You were affected by drought or other disasters
- You have irregular turnover, and
- You are a sole trader or small partnership that is affected by sickness, injury or leave.
Below is a little more detail on each.
NEW TO BUSINESS
- The key is new "to" business; this different to a new additional business. Business "commenced" after the comparison period in 2019 but before 1 March 2020.
- FIRST TEST – average monthly turnover (whole months) since commencement to 29 February 2020 multiplied by three OR
- SECOND TEST – the three months immediately before 1 March 2020 the applicable turnover test period.
- For the first test, days can be used if commenced post 1 February 2020; for the second, must have commenced before 1 December 2020.
For the September 2020 quarter, the business must have commenced after 1 July 2019. You can average the monthly turnover from commencement (first whole month) to 29 February 2020 and multiply by three or look at the period 1 December 2019 to 29 February 2020.
DISPOSALS, ACQUISITIONS AND RESTRUCTURES
This is a little complicated, but effectively, the comparative period is the month following the change, multiplied by three.
For the September 2020 quarter, this will be the first full month after the change multiplied by three.
"SUBSTANTIAL" INCREASED TURNOVER (GROWING)
- "Substantial" is the keyword here.
- A 50% increase in 12 months to test period or before 1 March 2020.
- A 25% increase in 6 months to test period or before 1 March 2020.
- A 12.5% increase in 3 months to test period or before 1 March 2020.
- If met, you should use the quarter immediately before the applicable turnover test period
For the September 2020 quarter, the test period is either the period to 29 February 2020 or to 30 June 2020, comparing the three months before 1 March 2020 or 1 July 2020. To test the increase in turnover for the period before 1 March 2020, compare February 2019 (for 12 months), August 2019 (6 months) or November 2019 (3 months) to February 2020. Similar theory applied for the period before the alternate test period.
Again this one is a little complicated but in effect, your comparison turnover for the quarter a year before the drought/natural disaster. IRREGULAR TURNOVER
- You must have a variance of at least 50% between a consecutive 3-month period, within below 12-month period.
- Average turnover for the 12 months immediately before 1 March 2020 or the applicable turnover period.
For the September 2020 quarter, the test period is the year before 1 March 2020 or before 1 July 2020 (in effect the 2020 financial year).
SOLE TRADER/SMALL PARTNERSHIPS WITH SICKNESS, INJURY OR LEAVE
- A little complicated, but effectively, the comparative period is the month before the change, multiplied by three.
- Must not have employees.
For the September 2020 quarter, this will be the first whole month before any change multiplied by three.
If you want Illumin8 to assist with assessing your eligibility & enrolments for JobKeeper 2.0, please let us know