An eligible employer is an employer that:
- On 1 March 2020, carried on a business in Australia or was a non‑profit body pursuing its objectives principally in Australia; and
- before the end of the JobKeeper fortnight, it met the original decline in turnover test*:
| 15% or more | 50% or more | 30% or more |
| ACNC-registered charity (excluding universities, or schools within the meaning of the GST Act – these entities need to meet the basic turnover test) |
Large businesses where aggregated turnover for the test period is: · likely to be $1 billion or more; or · aggregated turnover for the previous year to the test period was $1 billion or more A small business that forms part of a group that is a large business must have a >50% decline in turnover to satisfy the test. |
All other qualifying entities |
- And, was not:
- on 1 March 2020, subject to Major Bank Levy for any quarter ending before this date, a member of a consolidated group and another member of the group had been subject to the levy; or
- a government body of a particular kind, or a wholly-owned entity of such a body; or
- at any time in the fortnight, a provisional liquidator or liquidator has been appointed to the business or a trustee in bankruptcy had been appointed to the individual’s property.
1 March 2020 is an absolute date. An employer that had ceased trading before 1 March, commenced after 1 March 2020, or was not pursuing its objectives in Australia at that date, is not eligible.
*Additional tests now apply from 28 September 2020.
Business owners
Business owners:
- sole traders with an ABN, and
- one partner in a partnership, adult beneficiary of a trust, director or shareholder who works in the business (i.e., only one person in a partnership, one beneficiary of a trust, or one director / shareholder are eligible for JobKeeper payments).
will be eligible for the JobKeeper payment if the following conditions are met:
- The entity carried on a business on 1 March 2020 and is not a not-for-profit entity; and
- Had an ABN on 12 March 2020; and
- Had some business income in the 2018-19 income year included in a tax return that was lodged 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 notified the ATO of this (e.g. on an activity statement lodged with the ATO) by 12 March 2020. The Commissioner can potentially extend the deadline for holding an ABN, lodging the 2019 tax return or lodging a relevant activity statement.
- Passed the decline in turnover test; and
- The individual was not:
- employed by the business at any time in the relevant fortnight; or
- a permanent employee of another entity at the time the individual gives the nomination notice (i.e., they do not hold a full time or part time role with another employer); or
- a nominated JobKeeper employee of any other business; or
- entitled to parental leave pay or dad and partner pay or workers’ compensation payments for being totally incapacitated for work.
As at 1 March 2020, the individual satisfied all of the following:
- Aged 16 years or over; and
- If they are aged 16 or 17 years, they are either financially independent or are not undertaking full-time study;
- Actively engaged in the business; and
- An Australian resident under the Social Security Act or an Australian tax resident who holds a special category visa **
If the criteria have been met, the individual is eligible if they were actively engaged in the business in the fortnight of the JobKeeper payment, and they agreed to be nominated for JobKeeper payments and confirmed they pass the eligibility criteria.
What about the directors who work in the business?
If more than one director wants to access JobKeeper payments, they need to meet the eligibility criteria of an employee (see Eligible employees). To be an employee a director would have received salary/wages and this has been reported as salary/wages on activity statements, payment summaries, tax returns etc. If a director merely receives a distribution from the business then they are unlikely to be an employee.
The decline in turnover test
For businesses already enrolled in JobKeeper, to receive payments from 28 September 2020, you need to meet an extended decline in turnover test based on actual GST turnover.
Businesses that are enrolling for the first time, need to meet the basic eligibility test and the decline in turnover test/s for the relevant period.
| 30 March to 27 September 2020 | 28 September to 3 January 2021 | 4 January 2021 to 28 March 2021 | |
| Decline in turnover test | Projected GST turnover for a relevant month or quarter is expected to fall by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.* | Actual GST turnover in the September 2020 quarter (July, August & September) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.* | Actual GST turnover in the December 2020 quarter (October, November & December) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.* |
* Alternative tests may apply
Most businesses will generally use their Business Activity Statement (BAS) reporting to assess eligibility. However, as the BAS deadlines are generally not until the month after the end of the quarter, eligibility for JobKeeper will need to be assessed in advance of the BAS reporting deadlines to meet the wage condition for eligible employees.
The ATO has the power to extend the time an entity has to pay employees in order to meet the wage condition. For the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 the ATO is allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme.
Calculating GST turnover
Calculating GST turnover for tranches 2 and 3 of JobKeeper is different to the original JobKeeper requirements as entities will only be using current GST turnover figures (not projected GST turnover).
When applying the new turnover reduction tests for the September 2020 quarter and December 2020 quarter, entities that are registered for GST must use the same method that is used for GST reporting purposes. That is, if the entity is registered for GST on a:
- cash basis – then a cash basis must be used to calculate current GST turnover
- accrual basis – then an accrual basis must be used to calculate current GST turnover
If not registered for GST, then businesses can choose whether to calculate GST turnover using a cash or accruals basis but must use a consistent method.
Current GST turnover includes:
- proceeds from the sale of capital assets (unless the sale is input taxed).
- Taxable supplies
- GST-free supplies
Current GST turnover excludes:
- input taxed supplies such as residential rental income and financial supplies like dividends, interest etc.
- JobKeeper and ATO cash flow boost payments
- certain State based grants.
What if you don’t have a comparison period or there was a one-off event?
There are alternative tests available that can be used to determine eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019.
The new alternative tests remain broadly in line with the original, with the same seven circumstances available to entities where there is not an appropriate relevant comparison period in 2019.
These include tests for businesses that started after the comparison period, businesses that acquired or disposed of part of the business, and where a business restructure changed their entities turnover.
If you would like to be assessed under the Alternate Tests, please contact our office after 1 October on 3286 1322.
Not for profits
A number of modifications apply to not for profit entities when it comes to calculating GST turnover under the original decline in turnover test. It appears that the same modifications will generally also apply when determining whether a not for profit entity passes the new decline in turnover tests for the September 2020 and December 2020 quarters.
Wage condition
To be eligible to receive JobKeeper payments, the employer must meet a wage condition. That is, employers must have paid the eligible employee at least the applicable JobKeeper payment for the relevant fortnight.
The ATO reimburses the employer for the JobKeeper payment monthly in arrears.
As noted above, for the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 the ATO is allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme.
