JobKeeper 2.0 - The Alternative Test

The tests don't use the concept of projected GST turnover. The comparison only uses current GST turnover. This is consistent with the basic version of the additional decline in turnover test which involves comparing current GST turnover for the relevant test period with current GST turnover for the relevant comparison period.

One of the key differences between the concept of current GST turnover compared with projected GST turnover is that proceeds from the sale of capital assets are included in current GST turnover calculations (unless the sale of the asset is input taxed), while proceeds from the sale of capital assets are ignored when calculating projected GST turnover. This is likely to make it more difficult for entities to access the JobKeeper extension if they have sold plant and equipment, vehicles, property etc during the test period.

The legislative instrument confirms that the rules released by the Commissioner in connection with determining the timing of supplies for the JobKeeper decline in turnover tests apply to these new alternative tests as well. This should mean that if an entity is registered for GST it needs to calculate current GST turnover using the same accounting method that is used for GST reporting purposes (ie, cash or accruals). Entities that are not registered for GST can choose which method, but must use a consistent approach.

This alternative test applies to businesses that were on a strong growth path before the pandemic hit. The test can be applied if turnover increased:
• by 50% or more in the 12 months before the turnover test period or before 1 March 2020, or
• by 25% or more in the 6 months before the turnover test period or before 1 March 2020, or
• by 12.5% or more in the 3 months before the turnover test period or before 1 March 2020.

If the entity is using the period immediately before the turnover test period to determine whether there is a substantial increase in turnover, then the alternative test compares GST turnover for the test period (for example, the September 2020 quarter) with turnover for the 3 months immediately before the test period. If the entity is using the period immediately before 1 March 2020 to determine whether there is a substantial increase in turnover, then the alternative test compares GST turnover for the test period (for example, the September 2020 quarter) with turnover for the 3 months immediately before 1 March 2020.

The irregular turnover test is for businesses that cannot pass the decline in turnover tests because their GST turnover is irregular or ‘lumpy’, for example what often occurs in the building and construction industry, but not because of seasonal variations.
To understand if your turnover is irregular, look at the 12 months before the test period and divide the 12 months into 3 month periods. If the lowest GST turnover for any of these 3 month periods is no more than 50% of the highest of the 3 month periods then the test can be applied as long as the entity turnover is not cyclical.
Alternatively, you can look at the 12 months before 1 March 2020 instead of the 12 months immediately before the test period. If your GST turnover is irregular you can compare your current GST turnover for the test period with the average current GST turnover for the 12 months immediately before the applicable test period or 1 March 2020, multiplied by 3.

When applying the test for sole traders or small partnerships where the sole trader or a partner could not work for at least part of the comparison period because of sickness, injury or leave, the updated version of the test requires you to look at the current GST turnover for the month immediately before the month in which the sole trader or partner did not work. The original version of the test looked at the turnover for the month immediately after the month in which they returned to work.

There are two alternative tests that may apply to businesses that were in operation on or before 1 March 2020 but do not have the trading history for the comparison period:
• Comparing actual GST turnover for the test period (for example, September quarter 2020) with the average turnover since the entity commenced (using whole months); or
• Comparing the actual GST turnover for the test period with the turnover of the 3 months immediately before 1 March 2020 (for example, comparing the September quarter 2020 with the 3 months prior to 1 March 2020).