Jobkeeper – The tricks involved in the Turnover Test

The turnover test applicable to the Jobkeeper stimulus for businesses/employers is as follows: 1.       Annual aggregated turnover less than $1b, and you can demonstrate a reduction in revenue of 30% or more since 1 March 2020; or 2.       Annual aggregated turnover of $1b or more and can demonstrate a reduction in revenue of 50% or more since 1 March 2020. To determine the $1b threshold, the “aggregated turnover” definition requires you to include the annual turnover of all entities connected or affiliated with you – all worldwide related entities/businesses. This differs from the revenue rules for assessing the 30% or 50% revenue reduction. To assess whether a business/employer has a reduction in revenue – it must work out its current or projected revenue using the conditions below: 1.       Revenue includes all taxable sales and GST-free sales. GST-free sales would effectively cover all export and overseas sales made by the Australian business. Therefore, only the Australian-based revenue will be included, not those made by overseas entities. Generally, this will be the total sales reported at G1 in the Business Activity Statement of the business; 2.       Revenue will exclude input-taxed sales such as interest income, passive income (i.e. dividend), residential rent receipts, and certain fundraising receipts (i.e. charity auctions); 3.       The revenue reduction assessment will be done per employer/entity basis, so rules like the GST grouping rule are disregarded so only the revenue of the relevant employing entity is counted. 4.       Consolidated group rule is irrelevant when calculating the revenue reduction due to the individual entity basis assessment. Hence, intra-company transactions between related entities are likely to be included in the revenue count if reported in G1 in the BAS or considered a taxable or GST-free supply. New businesses or start-ups with no revenue or trading history in prior years will have alternative revenue tests that the Commissioner can apply once made available. When writing this article, no further information has been released by the ATO. If you have questions or want to know more about the turnover test for the Jobkeeper stimulus, please do not hesitate to contact your client manager. Kreston Stanley Williamson Team *Correct as of April 2020

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