The Coronavirus Economic Response Package (Payments and Benefits) Bill 2020 was introduced and passed both Houses of Parliament last week.
What it did was set up a framework including giving the Treasurer the power to make Rules, by way of Legislative Instrument, as to how the Scheme will work. Whilst these Rules have been released there are still a number of issues require clarification.
Given the uncertainty we recommend that businesses should still register an interest in the JobKeeper Scheme and do this before 26 April 2020.
Some Key Points
Drop In Turnover Test by more 30% or (50% for businesses with turnover >$1billion)
One of 2 tests for eligibility will need to be satisfied – either the basic test or the alternative test;
The basic test will be based on Projected GST turnover which is a business’s GST turnover from normal trading during a period (ex GST) as reported on the BAS and takes into account sales that have been made as those the entity is “likely to make” during the balance of the month or quarter in question, based on purchase orders, a business plan, budget forecast or some other reasonable support. We recommend that clients have clear and strong evidence based projections to support their case to the ATO should their estimates for eligibility be challenged.
If all the conditions are satisfied for either a month or quarter (depending on what period they decide to choose), then employers will be eligible for the period of the rest of the scheme and won’t be required to reassess. Reporting to the ATO either monthly or quarterly will still be required however.
The alternative test can be used where the Commissioner is satisfied that there is not an appropriate relevant comparison period (e.g. if the 2018 & 2019 period was affected by drought then use 2017 or if say a start up business began in late 2019, the test would be the average GST of all months prior to the turnover test period).
Integrity measures are in place for any contrived schemes that cause the tests to be satisfied so that overpayments can be clawed back.
Other Points Of Interest
Eligible Employees To Be Paid $1,500 a Fortnight
This is still somewhat unclear, although possibly ALL eligible employees (including those stood down) need to be paid at least $1,500 a fortnight or the employer will not be eligible for JobKeeper. An extension for this has been given until 30 April 2020 for the first 2 fortnights. We will advise once this area has been clarified. The Treasurer has announced a one-in all-in policy but we await for more details as to exactly what that means.
Role Of The ATO
Further, as previously announced by Treasury, the Commissioner of Taxation will be given certain discretions relating to the operation of the Scheme, including the ability to provide alternative turnover tests that can be satisfied if the tests already announced by Treasury cannot be met (e.g., that businesses with a turnover below $1 billion must have had or will have at least a 30% reduction in their turnover due to the effect of COVID-19).
Are We Expecting Changes?
We believe the information we previously provided you with at the time the Scheme was first announced by the Government and contained in the factsheets on Treasury’s website will be, on the whole, representative of how the Scheme ends up operating. As more details come to hand regarding the interpretation of the Rules, we will keep you informed.
Scolari Comerford remains committed to proactively advising and keeping businesses up to date.