The government has now passed legislation for the extension of the Job Keeper Payment scheme from 28 Sep 2020 to 28 Mar 2021 (see our previous Blog here)
Job Keeper 2.0 Extension – Decline in turn-over Alternative Testings
If circumstances or events outside usual business operations that resulted in the relevant comparison 2019 period (Sep or Dec 2019 qtr) not appropriate, then the Alternative Testing might apply.
To refresh, basic test is a decline in actual GST turn-over of 30 percent or more for the current test period qtr (the Sep 2020 qtr or the Dec 2020 qtr) compared to the relevant comparison period in the prior year (the Sep 2019 qtr or the Dec 2019 qtr). If you meet this test you will generally be eligible for the Job Keeper Extension.
If your entity fails the basic test, the Alternative test for turn-over is used to calculate if the entity has met the turn-over decline test for Sep 2020 or Dec 2020 qtr for eligibility purposes under Job Keeper extension program.
There are seven (7) Alternative Tests:
- Business that commenced after comparison period but before 1st Mar 2020
- Business disposal or acquisition that will change the turn-over of the entity
- Restructure of business that changed turn-over of the entity
- A substantial turn-over increase of the business
- Business has been affected by natural disaster or drought
- Irregular turn-over of the business
- A small partnership or sole trade with leave, injury or sickness
The Alternative Tests are explained below.
1.Test for businesses that commenced after comparison period but before the 1st Mar 2020
This test to be used if your business started operations after the 1st day of relevant comparison period, but not started on or after 1st Mar 2020.
Alternative Testing 1
If the entity started up business before 1st Feb 2020:
- determine if the GST turn-over has fallen by a minimum of 30 percent, take the average monthly current GST turn-over since the entity began business (before 1st Mar 2020) and multiply this by three. Compare the calculated figure with the applicable current GST turn-over for the Sep or Dec 2020 qtrs.
- the average monthly GST turn-over is the total of current GST turn-overs for each and every whole month since the entity began business and before 1st Mar 2020 the divide by number of whole months.
If the business began in Feb 2020:
- determine if the GST turn-over has decreased by a minimum of 30 percent, compare the average monthly current GST turn-over for Feb 2020 with the applicable current GST turn-over for the Sep or Dec 2020 qtr
- the average monthly GST turn-over for Feb 2020 will be the total current GST turn-over for the number of days the business was operating in Feb 2020 divide this by number of days that you were in business in Feb 2020 and then multiply that by 29 (number of days – Feb 2020).
Alternative Testing 2
Use this test only if your business began operations after first day of relevant comparison period but before the 1st Dec 2019.
Determine if the GST turn-over has decreased by a minimum of 30 percent, compare the applicable current GST turn-over for the Sep or Dec 2020 qtr with the current GST turn-overs for months of Dec 2019, Jan 2020 and Feb 2020.
2. Test if a business disposal or acquisition changed the turn-over of the entity
This test used when:
- the entity disposed of or acquired some part of the business from the beginning of relevant comparison period (this includes multiple disposals and acquisitions) but before applicable turn-over testing period, and
- disposal or acquisition changed the current GST turn-over of the entity.
Eg, the Sep 2020 qtr turn-over testing period, use this test if disposing of or acquiring part of the business from, 1st Jul 2019 but before the 1st Jul 2020. The disposal or acquisition also must have changed the current GST turn-over of the entity during that period of time. If disposal or acquisition made by the entity did not have an impact on the business in a way to change the current GST turn-over, then do not use this test.
Alternative Testing
Use the current GST turn-over from the month that falls immediately after the acquisition or disposal month and multiply by 3.
Determine if the GST turn-over has decreased by a minimum of 30 percent, compare the calculated figure with the applicable current GST turn-over for the Sep or Dec 2020 qtr.
Multiple disposals or acquisitions Alternative Testing
- If the entity made multiple disposals or acquisitions after the relevant period of comparison, you are able to use the entire month immediately following any of those disposals or acquisitions, and multiply by 3, for Alternative Testing.
No whole month after disposal or acquisition Alternative Testing
- If there is not a whole month between the disposal or acquisition the entity made and the turn-over testing period, then the entity can use the month immediately prior to the applicable turn-over test period.
3. Test for a restructure of business that changed the turn-over of the entity
This test used if:
- restructured part or the whole of the entity’s business from beginning of relevant comparison period but prior to applicable turn-over test period (includes multiple restructures), and
- restructure changed the current GST turn-over of the entity.
Eg, when calculating actual decline in turn-over for the Sep 2020 qtr turn-over testing period, you can use this test if you had restructured the business, or a part of the business, from the 1st Jul 2019 and prior to 1st Jul 2020. This restructure also must change the entity’s current GST turn-over. If this restructure didn’t impact business in a way to change the current GST turn-over, then do not use this test.
Alternative Testing
Use the current GST turn-over from the month right after the month of restructure completion and multiply the current GST turn-over from the month by 3.
Determine if the GST turn-over has decreased by a minimum of 30 percent, compare the calculated figure with the applicable current GST turn-over for the Sep or Dec 2020 qtr.
Alternative Testing for multiple restructures
- If the entity undertook multiple restructures after relevant period of comparison, use the entire month right after any restructure was undertaken and completed for Alternative Testing.
Not a whole month after the restructure Alternative Testing
- If there isn’t an entire month between restructure of the entity and the turn-over testing period, then the entity should use the month immediately prior to applicable turn-over testing period.
4. Test for business that has had substantial increase in turn-over
This test to be used if the entity has had a substantial increase to its current GST turn-over of:
- 50 percent or greater in twelve months immediately prior to the applicable turn-over testing period or before the 1st Mar 2020, or
- 25 percent or greater in six months immediately prior to the applicable turn-over testing period or before the 1st Mar 2020, or
- 12.5 percent or greater in three months immediately prior to the applicable turn-over testing period or before the 1st Mar 2020.
To test if your entity’s current GST turn-over increased, by at least the applicable percentage (50 percent, 25 percent or 12.5 percent), in the 12 (or 6 or 3) months immediately before the applicable turn-over test period or before 1 Mar 2020, compare:
- your current GST turn-over for the month immediately before the applicable turn-over test period or 1 Mar 2020, with
- your current GST turn-over for the month immediately before the start of the 12 (or 6 or 3) months.
| Table 1: Testing percentage increase in current GST turn-over | |||
| To test percentage increase in turn-over immediately before | 12 months
(50%) |
6 months
(25%) |
3 months
(12.5%) |
| Sep 2020 qtr (Jul to Sep 2020) | Test Jun 2019 turn-over with Jun 2020 turn-over | Test Dec 2019 turn-over with Jun 2020 turn-over | Test Mar 2020 turn-over with Jun 2020 turn-over |
| Dec 2020 qtr (Oct – Dec 2020) | Test Sep 2019 turn-over with Sep 2020 turn-over | Test Mar 2020 turn-over with Sep 2020 turn-over | Test Jun 2020 turn-over with Sep 2020 turn-over |
| 1 Mar 2020 | Test Feb 2019 turn-over with Feb 2020 turn-over | Test Aug 2019 turn-over with Feb 2020 turn-over | Test Nov 2019 turn-over with Feb 2020 turn-over |
Alternative Testing
To determine if your turn-over has declined by 30 percent, in applying this Alternative Testing:
- if you are using the period immediately prior to applicable turn-over test period to test whether you had a substantial increase in turn-over, compare
- the total of your entity’s current GST turn-over for the 3 months immediately before the applicable turn-over test period, with
- the applicable current GST turn-over in the turn-over test period (the Sep or Dec 2020 qtr).
- if you are using the period immediately before 1 Mar 2020 to test whether you had a substantial increase in turn-over, compare
- the total of the entity’s current GST turn-over for the three months immediately before 1 Mar 2020, with
- the applicable current GST turn-over in the turn-over test period (the Sep or Dec 2020 qtr).
5. Test for businesses affected by natural disaster or drought
This test used if:
- the entity conducted all or some of the business in declared natural disaster or drought zone during relevant comparison periods in 2019, and
- natural disaster or drought changed the turn-over of the entity.
Definition for this test, an area declared as a drought zone will include an area that is subject to formal declaration of drought by commonwealth, state, territory or local government agencies. Also included areas for which there is public identification and/or acknowledgment that area is drought affected by such agencies.
Eg, the public information sources following will provide acknowledgments, declarations, maps, statistics and guidance as to what declared drought zones are and drought affected areas for the purpose of this test:
- National Drought Map
- Australian Government Bureau of Meteorology Monthly Drought Statements, maps, rainfall and rainfall deficiency statistics
- Queensland – drought situation map
- NSW – Combined Drought Indicator map
- South Australia – Drought Affected Areas map.
Alternative Testing
Calculate the current GST turn-over of your entity for the Sep or Dec qtr in the year immediately prior to the year when the natural disaster or drought was declared, instead of the qtrs in 2019. Determine if the GST turn-over has decreased by a minimum of 15 percent, 30 percent or 50 percent, and compare the calculated figure against the current GST turn-over for the Sep or Dec 2020 qtr.
6. Test method for businesses that have an irregular turn-over
This test to be used if:
- the four consecutive three month periods ending the twelve months immediately prior to the applicable turn-over testing period or the 1st Mar 2020, the lowest of the entity’s current turn-over for any of the three month periods is not greater than fifty percent of the highest of entity’s current GST turn-over for any of the three month periods, and
- entity’s current GST turn-over is not cyclical.
Your entity can’t use this Alternative test when the entity’s turn-over is cyclical. Eg, fruit grower business is seasonal & usually has less turn-over during particular months of the year can not use this test. Or, eg, business es that usually have increased turn-over in Dec because of Christmas trade can’t use this test.
Alternative Testing
Applying this Alternative Testing, you must use the entity’s average monthly current GST turn-over. To calculate your entity’s average monthly current GST turn-over, add the total of the current GST turn-overs for each entire month in the twelve months immediately prior to the applicable turn-over testing period or the 1st Mar 2020, and then divide the total by twelve. Then multiply your entity’s average monthly current GST turn-over by three and compare that to the current GST turn-over for the applicable turn-over test period.
7. Test for a small partnership or sole trader with leave, injury or sickness
This test used if:
- a partnership with four or less partners or a sole trader, and the entity has zero employees
- one of the partners or the sole trader has not worked for part of or all of relevant comparison periods due to leave, injury or sickness and
- the turn-over was affected because of the partner or sole trader not working for part or all of that period.
Alternative Testing
Use the current GST turn-over from the month immediately prior to the month which the partner or sole trader did not work due to injury, sickness or leave and multiply by 3 then compare that figure with the current GST turn-over for the applicable turn-over testing period.
Bushfire or Drought Affected?
There are also various sub-tests for entities that fail an Alternative Testing (excluding Alternative Testing 5) where your entity has been affected by drought or bushfires.
At Accorti Accountants + Advisors we specialise in helping clients with complex and challenging issues. If you have questions or need assistance: Contact us now.
We work with clients all over Australia and have offices in Brisbane and the Gold Coast.
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Sources: Australian Taxation Office and Australian Taxation Office
