We have deconstructed the legislation for the 7 alternative JobKeeper turnover tests for businesses that have failed the basic test. If this sounds like your business, keep reading!

1) Your business is less than 12-months old

Circumstances

You cannot demonstrate a year-on-year decline because you started your business less than 12 months ago.

Alternative Test/s

There are 2 alternative tests available:

The first alternative test compares the entity’s projected GST turnover for the relevant 2020 period with the average turnover since the entity commenced business.

  • The comparison period is the average turnover since the start of the business against the test period of 1 calendar months.
  • If the relevant comparison period is a quarter, the entity multiplies the average monthly current GST turnover by three (for 1 quarter) and uses that figure instead of the entity’s current GST turnover.

The second alternative test compares the entity’s projected GST turnover for the relevant 2020 period with the average turnover of the 3 months immediately before the applicable turnover test period.

  • The standard comparison period is the average turnover for the last 3 months.
  • If the relevant comparison period is a calendar month, the entity divides the 3 months’ current GST turnover by 3 and uses that figure instead of the entity’s current GST turnover.

Other Considerations

If the business has received the bushfire lodgement and payment deferrals, or drought help relief, it should exclude the months in which those concessions were received from the calculation of the average. However, if the months in which you received those concessions are the only months you have been in business, you can disregard that, and include them all the same.

2) Your turnover was significantly impacted by a business acquisition or disposal

Circumstances

Your entity acquired or disposed of part of the business after the relevant comparison period

Alternative Test

Compare the entity’s projected GST turnover for the applicable turnover test period with the current GST turnover for the month after the month in which the disposal or acquisition occurred.

  • The comparison period is the turnover of the month after the disposal or acquisition occurred.
  • Where there are multiple acquisitions or disposals, the entity’s projected GST turnover will be compared with the GST turnover for the whole month after the last acquisition, disposal or restructure has taken place. This will ensure the projected turnover is compared with the turnover of the entity’s new business setting once these disposals or acquisitions have ended.
  • If there is no whole month after the last acquisition or disposal, then the month immediately before the applicable turnover test period is used.

Other Considerations

If the business has received the bushfire lodgement and payment deferrals, or drought help relief, it should exclude the months in which those concessions were received from the calculation of the average. They should instead use the nearest alternative month instead. That is, unless there are no other months available to them.

3) Your turnover was significantly impacted by a business restructure

Circumstances

Your business, or part of it, has undergone a restructure in the past 12 months, meaning year-on-year turnover is not a suitable comparison.

Alternative Test

Compare the entity’s projected GST turnover for the applicable turnover test period with the current GST turnover for the month after the month in which the restructure occurred.

  • The comparison period is the turnover of the month after the restructure occurred.
  • Where there are multiple restructures, the entity’s projected GST turnover will be compared with the GST turnover for the whole month after the last restructure has taken place. This will ensure the projected turnover is compared with the turnover of the entity’s new business setting once these restructures have ended.
  • If there is no whole month after the last restructure, then the month immediately before the applicable turnover test period is used.

Other Considerations

If the business has received the bushfire lodgement and payment deferrals, or drought help relief, it should exclude the months in which those concessions were received from the calculation of the average. They should instead use the nearest alternative month instead. That is, unless there are no other months available to them.

4) Your business had substantial increase in turnover

Circumstances

This is for high-growth businesses.

The ATO’s definition of a high-growth business is one that has grown more than 50% of turnover over a 12-month period.

To satisfy this requirement, you have to demonstrate that at least 1 of these have occurred in your business:

the entity’s turnover substantially increased by:

  • 50% or more in the 12 months immediately before the applicable turnover test period; or
  • 25% or more in the 6 months immediately before the applicable turnover test period, or
  • 5% or more in the 3 months immediately before the applicable turnover test period.

Alternative Test

The alternative test compares the entity’s projected GST turnover for the relevant 2020 period with the average turnover of the 3 months immediately before the applicable turnover test period.

  • The comparison period is the average turnover for the last 3 months.
  • If the comparison period is a calendar month, the entity divides the 3 months’ current GST turnover by 3 and uses that figure instead of the entity’s current month GST turnover
  • if the relevant comparison period is a quarter, the entity uses the 3 months’ current GST turnover

Other Considerations

If the business has received the bushfire lodgement and payment deferrals, or drought help relief, it should exclude the months in which those concessions were received from the calculation of the average. Business owners should not use any month covered by these concessions as the comparison, unless there is no alternative month available to use.

5) Your business has been affected by drought or natural disaster

Circumstances

Your business was affected by drought or other declared natural disaster during the relevant comparison period and believe that these events had a negative effect on your turnover.

Alternative Test

The alternative test allows you to use a comparison period from the year before IE 2018 instead of 2019.

6) Your business had irregular turnover

Circumstances

Your business has a large irregular variance in their turnover for the quarters ending in the 12 months because is not considered ‘cyclical’.

A business will be eligible if, over the 12 months leading up to the test period, the quarter with the highest GST turnover was more than double the revenue of the lowest-performing quarter.

Alternative Test

The comparison period calculation is the average turnover for the 12 months leading up to the test period of 1 calendar month. If the relevant comparison period is a quarter, multiply the average monthly current GST turnover by three and use that figure.

Other Considerations

If the business has received the bushfire lodgement and payment deferrals, or drought help relief, it should exclude the months in which those concessions were received from the calculation of the average.

7) A key stakeholder in your business with no employees had a significant illness or injury

Circumstances

In a situation where a sole-trader or partner in a partnership with no employees did not work for all or part of the comparison period in 2019 due to sickness, injury or other leave.

Alternative Test

The comparison period is the month of GST Turnover immediately after the individual’s return to work. If the relevant comparison period is a quarter, your multiply the your calculated month GST turnover by three, rather than using an actual three month period.

Considerations

If the business qualified for the ATO’s bushfire lodgement and payment deferrals, or received drought relief concessions and if these concessions applied in the month after the individual returned to work, then instead of using that month as the comparison point, the business should use the month immediately after those concessions stopped, instead.

5ivestar Business Services are tax agents located in Carina Heights on Brisbane’s Southside. We service all areas of Brisbane, Ipswich and the Sunshine Coast. We also practice as virtual CFOs, take on interim CFO engagements as well and  financial management, reengineering and restructures including business turnarounds and transformations and expert financial modelling.

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