JobKeeper:
everything you need to know.

If you haven't already, please click below to register for JobKeeper updates from the ATO:

Register for JobKeeper

Once you have registered your interest, you will need to check your eligibility for this subsidy as an employer. The eligibility is determined by a few factors including:

• Your business existed as at 1 March 2020, and
• Your business meets the decline in the turnover test.

There are 2 sets of turnover tests which you can apply to determine eligibility for JobKeeper. It doesn’t matter which test you choose, as long as you pass it. The good news is that once you have satisfied a test, you remain eligible for the remainder of the JobKeeper program to September 2020.

Basic Test

To be eligible for JobKeeper under the basic test, your sales must show a decline of at least 30% compared to the same time last year.

The test periods for initial eligibility can be;

• March 2020 to March 2019
• April 2020 (projected) to April 2019
• June quarter 2020 (projected) to June quarter 2019.

If you are not eligible just yet, you can continue to test in the remaining future periods. Note that you will only be eligible for JobKeeper once you have passed a test (future eligibility, will not be backdated to 30 March 2020 as is the case for initial test periods)

• May 2020 to May 2019
• June 2020 to June 2019
• July 2020 to June 2019
• August 2020 to August 2019
• September 2020 to August 2019
• September quarter 2020 to September quarter 2019

Alternative Tests

The ATO has now set out the alternative tests that they will make available when the basic test is not satisfied.  Importantly, the alternative tests are all about a situation when there is not an appropriate relevant comparison period.

There are 7 circumstances where the alternative tests will apply:

1. New businesses commenced during the comparison period
2. Businesses acquired or disposed of during the comparison period
3. The business was restructured during the comparison period
4. A business experiencing substantial growth in turnover during the comparison period
5. Businesses affected by drought or natural disaster
6. Businesses with irregular turnover
7. Sole traders or small partnerships with sickness, injury or leave

The tests work to allow you to use a different comparison period than the same period in the previous year (as would normally be required by the basic test).

We have summarised at a high level the conditions to use either of these alternative tests and the alternative comparative period turnover you can use.  Please note that we have only summarised at a high level to help you understand the general intention of the tests.  If you need to rely on the alternative tests, we suggest reaching out to the team at businessDEPOT to help.

New businesses

Application:  This test will be applicable when business was commenced before 1 March 2020 and after the relevant comparison period.  For example, if you are applying the test to the April-June 2020 quarter, this test would apply if you started business after 30 June 2019.

Replacement Comparison Turnover: In most situations, the replacement comparison turnover will be the average turnover for each whole month since commencing business.  There is also an option to only use the average the previous 3 months of trading (assuming you have traded for at least 3 full months).  If you commenced business after 31 January 2020, the replacement comparison will be based on the February 2020 turnover divided by the number of days of trading pro-rated for the full month (notably 29 days in Feb 2020).

Businesses acquired or disposed 

Application:  This test will apply when there was an acquisition or disposal of part of their business after the relevant comparison period and before the applicable test period, and the acquisition or disposal changed the entity’s turnover.  For example, this test would apply if when you are testing the month of April 2020, you would need to have acquired the business after 30 April 2019.

Replacement Comparison Turnover: In most situations, the replacement comparison turnover will be the average turnover since the acquisition or disposal (starting with the first month following the month of acquisition or disposal). Therefore, if you disposed of part of your business in December 2019, and you were testing turnover in April 2020, you would use the average of turnover from January to March 2020.

Business Restructured

Application: This test will apply when there was a restructure of your business (or part thereof) after the relevant comparison period and before the applicable test period, and the restructure changed the entity’s turnover.  For example, this test would apply if when you are testing the month of April 2020, you would need to have restructured after 30 April 2019.

Replacement Comparison Turnover: In most situations, the replacement comparison turnover will be the average turnover since the restructure (starting with the first month following the month of restructure). Therefore, if you restructured part of your business in December 2019, and you were testing turnover in April 2020, you would use the average of turnover from January to March 2020.

Substantial Growth Business

Application: This alternative test will apply in 3 situations:

1. turnover has increased by 50% or more in the last 12 months (prior to the test period)
2. turnover has increased by 25% or more in the last 6 months (prior to the test period)
3. turnover has increased by 12.5% or more in the last 3 months (prior to the test period)

Replacement Comparison Turnover: You can utilise turnover from the 3 months prior to the test period (divided by 3 if you are testing against a month rather than a quarter).

Businesses affected by drought or natural disaster

Application: The only conditions for this alternative test is that the entity conducted business in a declared drought zone, or natural disaster zone during the relevant comparison period, and it changed the entity’s turnover.

Replacement Comparison Turnover: The turnover from the same period in the year immediately before the declaration of drought or natural disaster was made.

Businesses with irregular turnover

Application: These conditions look at the actual results on a quarterly basis for the 12 months immediately before the applicable test period and require the lowest turnover quarter to be no more than 50% of the highest turnover quarter.  It is also required that the turnover is not ‘cyclical’.

Replacement Comparison Turnover: 12 months average turnover for each whole month immediately before the applicable test period.

Sole traders or small partnerships with sickness, injury or leave

Application: This is applicable if the entity is a sole trader or small partnership that has no employees, had the sole trader or at least one of the partners not work for all or part of the relevant comparison period due to sickness, injury or leave, and the turnover was affected as a result of it.

Replacement Comparison Turnover: Use the turnover for the month immediately after the period in which the sole trader or partner returned to work (multiplied by 3 if the comparison period if a quarter).

If you would like more detail, please do not hesitate to reach out to our team or review further information on the ATO website. 

Tips for applying the tests to your business

Consider your historical financial data in Xero, and your expected turnover in the coming months to determine if you have experienced the necessary decline in your revenue.

If you account for GST on an accruals basis you must look at your revenue on an accruals basis. If you account for GST on a cash basis, you have the choice of using cash or accruals for your calculations – as long as you are consistent.

Given this is a projected turnover test, the ATO will be given the ability to recover overpaid amounts for ineligible employers although it has previously been suggested that ‘some tolerance’ will be exercised if a business expects income to drop by 30% but the actual drop is ‘slightly smaller’. This is also a positive sign as it shows they are not intending to apply a ‘hard fast’ rule-based test.

It will be essential to thoroughly document your calculations, assumptions, and methodologies. You may be required to show these working to the ATO to prove your eligibility in the future (particularly if you are close to the 30% mark). Put the work in now to document your findings so you have it if/when the ATO comes asking for it. 

Contact Link if you need assistance in determining your revenue decline.

Download our Revenue Calculator here.

Eligible employees are those that are;

• Employed as at 1 March 2020, including those who were stood down or re-hired
• Full time or part time. Casual employees are also eligible where they have had a regular and systemic engagement with the business for at least 12 months.
• Aged at least 16 years old
• Not in receipt of JobKeeper from another business
• An Australian Citizen, Permanent Resident or Visa class 444 (NZ)
• Note that if you elect to participate in JobKeeper, all eligible employees are required to participate (you cannot pick and choose)

Ensure you are paying eligible employees at least $1,500 per fortnight from 30 March 2020. If a back payment is required for April, then this must be processed and paid in April. Only employees who have received at least $1,500 per fortnight (before tax) are eligible for JobKeeper.

IF YOU ARE USING XERO

Today, Xero has released their JobKeeper functionality. Its still being developed, but at a glance, it looks great.

Login to Xero > Click on Payroll Overview > COVID-19 Support

Review the About tab – it provides guidance and steps on various aspects of the JobKeeper process

Review the JobKeeper Settings tab – Xero will identify potentially eligible employees. It is essential that you still refer to the actual eligibility criteria to ensure employees are eligible to confirm.

It is essential that you advise your employees of your intention to claim JobKeeper for them AND receive their nomination confirming they are eligible.

• For all eligible employees, advise them in writing that you intend to claim the JobKeeper payment for them.
• Have each eligible employee completed and return to you the JobKeeper Employee Nomination. Use either PDF or Word version attached

Download our Employer Declaration template here

Download the Employee Nomination form here