Without looking at the answers, test your knowledge and see if you can answer the following JobKeeper questions. (If you disagree with any of the answers please contact the Tax Team).
1. Is it really a “one-in-all-in principle” – i.e. do I have to include all my eligible employees for JobKeeper?
While the legislation and Treasurer’s rules are silent on this, the fact sheets released by the Government make it clear that it is a “one-in-all-in principle”. That is you cannot include certain eligible employees and exclude others. However, an employee can choose not to participate (e.g. because they are already receiving JobKeeper from another employer). Also, an employer still has the choice to re-hire employees that have been stood down post 1 March 2020.
2. Can I defer payment to employees until I get reimbursed from the Tax Office?
No. Payment must be made to employees first and payment from the ATO is made in arrears. For the first two JobKeeper payments, payment must be made by the end of April. The Government expects employers to speak to their bank if they are short on funding having regard to the “security” provided by the Government.
3. I only have five employees that already earn more than $1,500 per fortnight. Is it worth signing up for JobKeeper?
This will depend on the client. Over a six month period, the ATO will pay a before tax amount of $19,500 per eligible employee. Five employees totals $97,500 gross over 6 months. This amount can be retained by the employer if their employees are earning over the $1,500 per fortnight.
4. Can I use my Business Activity Statements to calculate my GST turnover?
Care is required here. The business activity statement cannot be used if you are grouped for GST purposes as the turnover test is based on an entity by entity calculation. This also means intra-group transactions are not ignored.
5. If I don’t qualify for the decline in turnover test for the month of April, are there other options available?
Yes the entity can choose to use March month actuals or apply a quarterly test from 1 April. In certain circumstances, an alternative method may also be available if there is no comparable period.
6. What if my turnover forecasts are wrong?
There does not appear to be any adverse consequences where the forecasts turn out to be different to the actual results. However, the ATO has not yet provided detail on how they will consider variances from forecasts in applying the specific anti-avoidance rules under the scheme.
7. Can I undertake the GST turnover test on a consolidated group basis?
Based on the legislation and rules, the GST turnover test must be undertaken on an entity by entity basis. There are no grouping rules currently available though the ATO may provide further guidance on this.
8. What if I have a consolidated group and my employing entity does not derive any revenue?
This is currently problematic as the employing entity cannot satisfy the decline in turnover test.
9. What happens if my turnover has not declined, but my profitability has declined due to bad debts? Can I still qualify?
The turnover test is based on revenue. Bad debts and other expenses do not affect turnover. Also note that there are two turnover tests – the first based on which decline percentage to apply (generally 30% or 50%) which is based on “aggregated turnover” and the “decline in turnover test” which is based on the concept of GST turnover.
10. Does GST turnover for JobKeeper purposes include export sales?
Yes, the concept of GST turnover includes taxable supplies and GST free supplies (e.g. GST free exports) but not input taxed supplies.
11. Is eligibility to JobKeeper affected by whether the an entity is a “base rate entity” for income tax purposes?
No, the concept of “base rate entity” is not relevant for JobKeeper assessment purposes.
12. What if I have a service entity that earns revenue from a related party on a cost plus basis?
The service entity would prima facie not be able to satisfy turnover test unless possibly there were genuine commercial reasons that the service entity could demonstrate an agreed lower revenue assuming the parties had been dealing at arm’s length.
13. What if I’m a sole trader, director or shareholder and also work as an employee for someone else? Can I make the decision to claim JobKeeper as an eligible business participant and choose not to claim JobKeeper from my employer?
No, the individual cannot claim the JobKeeper as a sole trader / director or shareholder in this situation. This is the case even if the individual’s employer does not qualify or elect to apply for JobKeeper. In other words, employees cannot qualify for JobKeeper in their own right as a sole trader, director or shareholder – they must claim through their employer or nominated employer if more than one.
The Tax Team also notes there have been a number of employment law related issues raised in relation to JobKeeper. It will be important for clients to obtain appropriate legal advice on these matters having regard to the temporary changes made to the FairWork Act as a result of COVID-19.