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The Banter Blog article titled The JobKeeper Payment, published on 17 April 2020, outlined the operation of the Government’s $130 billion JobKeeper Payment scheme which was enacted on 9 April 2020 (the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (the Act)). On the same day, the Treasurer registered a Legislative Instrument titled the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the Rules), which set out the Treasurer’s rules to give effect to the JobKeeper scheme.
Since the previous Banter Blog article was published, the landscape has been rapidly changing, with substantial amendments to the JobKeeper payment rules registered on 1 May 2020, and as the ATO continuously issues new guidance.
This article provides links and brief details of the new information to assist practitioners and their clients to locate these resources.
This article does not provide technical analysis and is not an exhaustive reference to ATO guidance.
On 1 May 2020, the Treasurer registered a Legislative Instrument titled the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 2) 2020 (Amending Rules No. 2).
The Amending Rules No. 2 refine and clarify elements of the JobKeeper scheme. In particular, they:
The modified decline in turnover test will apply to an employer entity that is a member of a consolidated group or a consolidatable group (for the purposes of Div 703 of the ITAA 1997), or a GST group (for the purposes of Div 48 of the GST Act). Very broadly, in calculating its decline in turnover, the employer entity may choose to replace its turnover figures with the sums of the turnovers of the group members to which it supplies employee labour services. The ATO has also released an online fact sheet titled Modified basic test for group employer entities (QC 62132) to provide guidance on how to apply the modified test.
On 23 April 2020, a Legislative Instrument titled Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020 was registered. The Legislative Instrument sets out alternative decline in turnover tests (the alternative tests) where there is not an appropriate relevant comparison period in 2019. There is a separate alternative test for each of seven classes of entities.
If an entity satisfies the basic test, it does not need to also satisfy an alternative test. Further, an alternative test cannot make the entity ineligible, if the entity is eligible under the basic test.
The ATO’s updated web guidance on the alternative tests provides worked examples for some of the alternative tests.
Each alternative test has eligibility criteria that must be met in order for the entity to apply the test.
One of the alternative tests applies to a scenario where the entity’s turnover has ‘substantially increased’ over a period of three, six or 12 months. In determining the increase in turnover over a 12-month period, where the test month is April 2020, the ATO states:
[t]o test if your entity’s current GST turnover increased since the start of April 2019, compare the current GST turnover for March 2019 with the current GST turnover for March 2020.
This clarifies common questions about which months to compare to determine eligibility (i.e. whether the March 2020 turnover should be compared to the turnover for April 2019 or March 2019).
Practical Compliance Guideline PCG 2020/4 (the Guideline) provides guidance on how the ATO will apply their compliance resources to schemes to obtain access to the JobKeeper payment, or an increased amount of a JobKeeper payment.
Section 19 of the Act, under the heading ‘Contrived Schemes’, provides that the Commissioner may determine that an entity was never entitled to a JobKeeper payment or was entitled to a different amount, where any entity entered into or carried out a scheme for the sole or dominant purpose of enabling the entity claiming JobKeeper to obtain or increase its entitlement to the JobKeeper payment.
The Guideline indicates that the Commissioner will particularly be concerned in circumstances where:
The eight examples in the Guideline cover:
Law Administration Practice Statement PS LA 2020/1 (the Practice Statement) applies for the purposes of satisfying the eligibility criteria for the cash flow boost or the JobKeeper payment in respect of an eligible business participant.
Relevantly, for both purposes, the entity must have:
The Practice Statement provides guidance on the relevant circumstances that should be taken into account when the Commissioner is considering whether to grant further time for an entity.
The Practice Statement assists in answering common questions in respect of those entities that had not lodged a 2019 income tax return by 12 March 2020 — e.g. where they commenced business after 30 June 2019, or are subject to a tax agent extension for lodgment until 15 May 2020 — and also had not lodged a BAS by 12 March 2020 or are not required to (for example, because they are not required to be registered for GST).
The Commissioner does not have the discretion to extend the date by which an entity can derive an amount of assessable income or make a taxable supply. The Commissioner can only extend the date by which notice is provided. Therefore the Commissioner cannot exercise the discretion in respect of all entities who do not satisfy the notification requirement.
If an entity needs to speak to the ATO about their eligibility, more information about this in relation to the cash flow boost is on the ATO website at the below links. Essentially, you need to contact the ATO and provide more information.
There is currently no corresponding information in relation to the JobKeeper payment, however it is likely that the same principle would apply — i.e. contact the ATO and provide additional information.
Law Companion Ruling LCR 2020/1 (the Ruling) is intended to assist in working out when an entity has met the decline in turnover test, including in the identification of relevant supplies, allocation of supplies to relevant periods and the value of each supply.
As an alternative to allocating a supply to a relevant period and then determining its value based strictly on the time the supply is made (which may be difficult to determine), the Commissioner will allow an entity to use the following alternative methods:
The Ruling states that it supplements guidance on the ATO’s website and that ‘[i]t is not our intent to focus compliance resources on circumstances where you have already used guidance on our website in good faith to determine whether you satisfy the decline in turnover test.’
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