Refinement of JobKeeper Rules and ATO alternative decline in turnover tests
27 April 2020
In response to identified “loopholes” in the JobKeeper program, the Federal Government has announced changes to how the program will operate.
The ATO has also announced 7 alternative tests for satisfying the decline in turnover requirement for employer eligibility.
Previous articles by DMAW Lawyers’ specialist workplace law team on the JobKeeper scheme along with other COVID 19 workplace changes available here and here.
Treasurer clarifies operation of the JobKeeper Rules
The announced changes to the JobKeeper rules include the following:
‘One in, all in’ principle: Once an employer decides to participate in the JobKeeper scheme and their eligible employees have agreed to be nominated by the employer, the employer must ensure that all of these eligible employees are covered by their participation in the scheme including all eligible employees who are undertaking work for the employer or those who have been stood down. The employer cannot select which eligible employees will participate in the scheme;
Employees employed through a special purpose entity, rather than an operating entity: An alternative decline in turnover test will be provided to accommodate businesses where staff are employed by an entity which is not the operational entity of the business, and therefore, on a stand alone basis, would not be able to demonstrate the requisite reduction in turnover;
Charities and the treatment of government revenue: Changes will allow charities (other than schools and universities) to elect to exclude government revenue from the JobKeeper turnover test;
Full time students aged 16 and 17 years old: The rules will provide that full-time students who are 17 years old and younger, and who are not financially independent, are not eligible for the JobKeeper Payment.
Universities: Changes will clarify that core Commonwealth funding provided to universities will be included in the JobKeeper turnover tests.
ATO releases alternative decline in turnover tests
As discussed in previous articles the JobKeeper Rules enable the ATO to apply alternative decline in turnover tests to accommodate businesses which may not be able to demonstrate the requisite decline in turnover under the standard tests which are based on comparison with a corresponding period in 2019.
The ATO has now released a legislative instrument (which can be accessed here) which enables businesses with no appropriate relevant comparison period in 2019 to instead compare a differing period, if they are one of seven classes of businesses.
The alternative tests apply where the entity:
is a new business which commenced before 1 March 2020 but after the relevant comparison period in 2019;
acquired or disposed part of the business after the relevant comparison period in 2019 which resulted in substantial changes to the turnover of the business;
undertook a restructure between the relevant comparison period in 2019 and the applicable turnover period in 2020;
has had a substantial increase in turnover of:
50% or more in the 12 months immediately before the applicable turnover test period in 2020;
25% or more in the 6 months immediately before the applicable turnover test period in 2020; or
5% or more in the 3 months immediately before the applicable turnover test period in 2020;
was affected by drought or other declared natural disaster during the relevant comparison period;
has a large irregular variance in their turnover (defined as having a lowest quarter less than 50% of the highest turnover quarter where the entity’s turnover is not cyclical) for the quarters ending in the 12 months before the applicable turnover test period in 2020; or
is a sole trader or small partnership where the turnover of the sole trader or partnership was affected by the sole trader or a partner not working for all or part of that period due to sickness, injury or leave.
Where an entity satisfies the standard decline in turnover tests, there is no need to consider the alternative tests.
Similarly, where more than one alternative test may apply, such as where a business disposed of assets and undertook a restructure, only one of the alternative tests need to be satisfied.
For further advice on the JobKeeper scheme and whether your business may be eligible, please contact our specialist workplace law team.
This article provides general commentary only. It does not purport to be legal advice. We recommend that you seek professional advice having regard to your own particular circumstances.
Paul Dugan, Principal in our Disputes Team
Contact Email: email@example.com Direct Telephone: +61 8 8210 2266
Kylie Dunn, Senior Associate in our Disputes Team
Contact Email: firstname.lastname@example.org Direct Telephone: +61 8 8210 2286