There have been a number of key JobKeeper developments over the past couple of weeks:
ATO ruling on calculating GST turnover
LCR 2020/1 was released on Monday and provides detailed guidance on calculating GST turnover for JobKeeper purposes. The ATO sets out 4 possible alternatives that could be used to undertake the calculations, including using the GST attribution rules. The ATO now confirms that if an entity reports for GST purposes using a cash basis it can calculate GST turnover using either a cash or accruals basis. If the entity reports for GST using an accruals basis then it can calculate GST turnover using an accruals basis. A cash basis could potentially be used but the entity might be asked to explain why this is an appropriate reflection of turnover.
Service entities
As announced earlier in the week, the new rules dealing specifically with service entities have been released but unfortunately won’t apply to all groups that utilise a service entity. However, the ATO released PCG 2020/4 which explains how the ATO will apply compliance resources to schemes to access JobKeeper and this provides a number of specific examples relating to service entity arrangement which demonstrate that adjustments to service fees might be acceptable in some instances. If client service entities don’t fall within the scope of the modified tests released last Friday, then it is worth taking a look at examples 4, 5 and 6 in the PCG to see whether these entities could potentially access JobKeeper under the normal turnover reduction tests.
Seeking ATO discretion
In order to access the JobKeeper rules for an eligible business participant (e.g., sole trader, director of a company etc) there are a number of additional conditions that need to be met. For example, the entity must have had an ABN on 12 March 2020. Also, it must have had some business income in the 2018-19 income year and lodged a 2019 tax return by 12 March 2020 or made some supplies connected with Australia in a tax period that started on or after 1 July 2018 and ended before 12 March 2020 and the ATO was notified of this by 12 March 2020 (e.g., on an activity statement).
The ATO can potentially exercise discretion to extend the deadline for meeting these conditions and guidance on seeking this discretion was released late yesterday, including a specific application form that should be used for this purpose. The ATO confirms that you cannot enrol to receive JobKeeper payments until you have been notified that the Commissioner has granted an extension. See Application form for Commissioner’s discretion.
Final day for April JobKeeper payments
As you will all be aware, for employers accessing JobKeeper from April, JobKeeper payments must have been made to eligible employees by COB today for the 30 March – 12 April 2020 and 13 April – 26 April 2020 fortnights.
References: Michael Carruthers, Tax Director | Knowledge Shop
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