The ATO has published a ruling on the decline in turnover test for businesses applying for the JobKeeper scheme as part of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020.
This turnover test requires businesses to calculate their ‘current GST turnover’ and ‘projected GST turnover’, subject to modifications to the definitions outlined in the Payments and Benefits Rules. The new ruling outlines the aspects of the decline in turnover in the following steps:
- Step A: what supplies are relevant when calculating projected GST turnover and current GST turnover,
- Step B: how you allocate supplies to relevant periods,
- Step C: how you determine the value of each supply that has been allocated to a relevant period, and
- Step D: The ATO compliance approach, which effectively allows you to work out Step B and Step C at the same time.
The turnover test period must be either a calendar month that ends after 30 March 2020 and before 1 October 2020, or a quarter that starts on 1 April 2020 or 1 July 2020.
During the turnover test period, businesses will satisfy the decline in turnover test if:
- Their projected GST turnover falls short of their current GST turnover for a relevant comparison period (the comparison turnover, and
- The shortfall expressed as a percentage of the comparison turnover equals or exceeds the specified percentage for the business
Keep in mind that the decline in turnover test applies to both entities that are registered and not registered for GST in determining if they are eligible for the JobKeeper payment.
The ruling also covers another approach to calculating business’ turnover – the cash or accruals approach – and outlines alternative methods that will allow for the allocation of supplies to a relevant period and determination of the value of those supplies.