JobKeeper Payments: Alternative decline in turnover tests

by | Apr 24, 2020

The Commissioner of Taxation yesterday made a determination, that alternative “decline in turnover tests” apply to certain entities seeking to qualify for the JobKeeper payments.

The determination was made by Legislative Instrument yesterday and applies from today.

The determination details the alternative decline in turnover tests and defines the classes of entities to whom the alternative tests apply.

Why alternative decline in turnover tests?

To qualify for the JobKeeper scheme an employer must have suffered, or be likely to suffer, a 30% or 50% (depending on size) decline in relevant turnover relative to a “comparison period,” broadly a corresponding period 12 months ago (the “decline in turnover test”).

The Commissioner determined, under a power in the JobKeeper Rules, an alternative test should apply because he is satisfied there is not an appropriate relevant “comparison period” for certain entities under the decline in turnover test in the Rules.

Which entities apply an alternative test?

An alternative decline in turnover test may be available for an entity having one or more of the circumstances described below, broadly, in or over the relevant previous 12 months; namely an entity:

  1. that commenced business
  2. with turnover affected by a business acquisition or disposal
  3. with turnover affected by a business restructure
  4. with ‘spiked’ turnover in a certain period(s) within that 12 months
  5. with turnover relevantly affected by drought or natural disaster
  6. with non-cyclical turnover affected by significant quarterly variation over that 12 months
  7. that is a sole trader or small partnership with turnover affected by sickness, injury or leave of the sole trader or partner.

Each of these classes of entities is subject to specific definitions which elaborate the broad descriptions above.

Furthermore, each of these classes has a different and detailed alternative decline in turnover test set out in the legislative instrument. In very broad terms, each alternative test seeks to establish a ‘normalised’ turnover for a relevant comparison period, to enable the entity to determine whether it has suffered a decline in turnover of sufficient magnitude to be a qualified employer or qualified entity under the JobKeeper scheme.

The alternative decline in turnover tests helpfully address many situations of businesses and entities that to date have not been able to qualify under the main decline in turnover test. They also raise multiple issues that many businesses will need to resolve to satisfy one of the alternative tests.

ICGTAX is continuing to analyse the details in the Legislative Instrument and will update this article as soon as possible with further commentary on this important determination.

In the meantime, please contact Chris Gibbs or Don Green at ICGTAX to find out whether you qualify under the JobKeeper scheme, having regard to your specific circumstances.

Chris Gibbs Email Mob: +61 (0)4 0317 8599 Don Green Email Mob: +61 (0)4 1234 6104


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