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Understanding JobKeeper Part 2: Calculating GST turnover Craig Whatman, Partner April 2020 Pitcher Partners Advisors Proprietary Limited ABN 80 052 920 206
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Who is eligible? What is projected GST turnover? How do you assess Turnover and BAS reporting your eligibility? The risk of getting it wrong When do you assess Ongoing compliance your eligibility? How do you determine turnover? 4 Pitcher Partners is an association of independent firms.
Overview Key aspects of the scheme Stimulus estimated to cost $130b over a 6 month period Eligible Employers Eligible Employees Payable to eligible employers Payment of $1,500 (gross before tax) and non-employer businesses (e.g. self- to each employee who is employed by an employed) who have requisite decline in their eligible employer turnover during the relevant period Register interest in scheme from 30 March 2020 on ATO website https://www.ato.gov.au/Job-keeper-payment/ Employers (or their tax agent) can enrol from 20 April 2020 5 Pitcher Partners is an association of independent firms.
Who is eligible? Decline in turnover thresholds An entity will satisfy the decline in turnover test when compared to the same month or quarter in 2019 if the entity is An ACNC-registered charity An entity that has aggregated Any other entity and its (excluding universities and turnover of more than $1b turnover has decreased schools) and its turnover has and its turnover has by at least 30% decreased by at least 15% decreased by at least 50% 6 Pitcher Partners is an association of independent firms.
How do you test a decline in turnover? Two ways an entity may satisfy a decline in turnover test Basic test Alternative test 7 Pitcher Partners is an association of independent firms.
How do you test a decline in turnover? Basic Test Requires a comparison between the test period and a comparison period The turnover test period must be The relevant comparison period must be the period in 2019 that • a calendar month that ends corresponds to the test period – after 30 March 2020 and before e.g. if testing April 2020, you must 1 October 2020 compare with April 2019 or • a quarter that starts on 1 April or 1 July 2020 The employer can choose an eligible month or quarter as a test period irrespective of whether they lodge their BAS monthly or quarterly The test only needs to be satisfied in one test period 8 Pitcher Partners is an association of independent firms.
How do you test a decline in turnover? Alternative test The Commissioner may determine an alternative test for a class of entities by way of legislative instrument or take other factors into account for individual entities Where a business was The turnover for the The Commissioner has not in operation prior year was not discretion to consider a year earlier representative of the additional information entity’s usual or that the business can average turnover provide to establish that they have been e.g. because of drought, adversely affected or their turnover is typically by COVID-19 highly variable 9 Pitcher Partners is an association of independent firms.
How do you calculate your turnover? Projected GST turnover Projected GST turnover is the sum of the value of all supplies an entity has made or is likely to make, during the relevant period The relevant period for JobKeeper purposes = the test period (month or quarter) What to include What to exclude Taxable supplies Input taxed supplies Supplies not connected GST-free supplies e.g. residential rents with the enterprise and income from Supplies not connected financial supplies with the indirect tax zone Supplies for nil (Australia) consideration provided they are not taxable under the associate rules 10 Pitcher Partners is an association of independent firms.
How do you calculate your turnover? Projected GST turnover Special modifications for the JobKeeper Payment • The relevant period is the month or quarter test period and comparison period • Supplies between members of the same GST group are included • Each external territory is treated as forming part of the indirect tax zone An entity that is a DGR – ACNC-registered charities each gift described in 30-15 ITAA who are not DGRs must include and received, or likely to be gifts received or likely to be received (e.g. a donation) is to be received by way of monetary treated as consideration for donation, gifts of property with a supply, the value of which is a value greater than $5,000 and equal to the amount of the gift listed Australian shares 11 Pitcher Partners is an association of independent firms.
How do you calculate your turnover? What is the ‘value’ of supplies • A defined term for GST purposes • Equals the GST exclusive consideration received in relation to a supply VALUE Don't rely on what has been reported on the BAS! The value of all supplies that an entity has made will not necessarily be the amount that is reported at G1 on the BAS 12 Pitcher Partners is an association of independent firms.
Checklist of issues to consider when calculating your turnover Margin scheme supplies GST groups Associates Out of scope income Insurance settlements Input taxed supplies 13 Pitcher Partners is an association of independent firms.
Checklist of issues to consider when calculating your turnover GST-free supplies Barter transactions Supplies of private assets Supplies made as agent Incorrectly registered entities 14 Pitcher Partners is an association of independent firms.
EXAMPLE 1 Incorrectly registered entities Impact 50% 50% BusCo1 BusCo2 Likely to constitute a partnership for GST purposes The JV entities may not meet the threshold test of carrying on an enterprise in their own right or Joint bank Commercial Managing may not meet the decline in account rental property agent turnover test A partnership return is not lodged and each joint venture party includes 50% of the value of each rent payment as a taxable supply in their own BAS 15 Pitcher Partners is an association of independent firms.
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