Alternative test for determining eligibility for JobKeeper wage subsidy
On Thursday 23 April, the Australian Taxation Office released their legislative instrument outlining the details of the “alternative test” for determining eligibility for the JobKeeper wage subsidy program.
The basic test is simply comparing turnover from a current period to the same period 12 months ago. Where there is not an appropriate relevant comparison period then the alternative test can be used.
To be eligible for the alternative test, an entity needs to fall within one of seven classes that the Commissioner of Taxation has determined. These are:
- Business commenced within the last 12 months
- Acquisition or disposal changed turnover within the last 12 months
- Business restructure changed turnover within the last 12 months
- Business had a substantial increase in turnover
- Business has irregular (but not cyclical) turnover
- Business has been affected by drought or natural disaster
- Business is a sole trader or small partnership with no employees and had sickness, injury or leave
In each class there is an alternative basis to use as the comparison turnover when comparing to current period turnover. Furthermore, in all classes and for each application, something needs to have happened to the business that is outside the usual business setting that makes the prior comparison period an inappropriate reference point.
If a business fails the basic test and either fails the alternative test, or doesn’t fit within one of these classes, then there is no further scope to apply for the program.
Other key notes:
- These alternative tests are only applicable if the basic test is failed.
- The grounds for applying an alternative test is that the comparison period is not an appropriate reference point. Therefore, something needs to have happened in the prior 12 months that renders the comparison period unfair. That something also needs to be outside the usual business setting for that entity.
- If more than one alternative test applies, only need to satisfy one of them.
- The Commissioner has determined that these are the classes of business that the alternative test applies to. Therefore, for an alternative test to apply a business needs to come under one of these classes. There is no further scope for testing under the program.
- The tests are self-assessment based much like the basic test. The application form does not require any test data or proof of satisfying the test to be submitted. The application doesn’t even ask to declare whether the applicant has applied the basic or alternative test.
- Proof of satisfying the test is no doubt part of the ongoing record keeping requirements and general anti-avoidance/integrity rules still apply to these tests.
- The actual legislative instrument and explanatory statement is available here.
- The ATO has a summary page here.
Please contact your local Accru office if you need any assistance with your application for the JobKeeper Payment.