Under the basic test, a business’ September 2020 quarter GST turnover, as recorded in their BAS, must be 70% or less than their September 2019 quarter. The basic test eligibility criteria is as follows:

		JobKeeper Phase 1	JobKeeper Phase 2	JobKeeper Phase 3
Period		30 March 2020 – 27 Sept 2020	28 Sept 2020 – 3 Jan 2021	4 Jan 2021 – 28 March 2021
Summary		Eligible employees for eligible businesses receive: ·          $1,500 per fortnight for all employees	Eligible employees for eligible businesses receive: ·          $1,200 per fortnight for all employees who satisfy the 80-hour threshold ·          Your 28 day reference period or periods is based on when your pay cycle ends and therefore won’t be the same for all employers and employees. Use either: ·          The pre-March period which is the 28 days which finish on the last day of the last pay cycle that ended before 1 March 2020; or ·          The pre-July period which is the 28 days which finish on the last day of the last pay cycle that ended before 1 July 2020 If both are applicable then use the higher of the two.   Your employee only needs to satisfy the 80-hour threshold in one of the 28-day reference periods. If they satisfy it in one reference period, then you don’t have to determine if they satisfy it in the other reference periods.   If your pay cycle is longer than 28 days for your employees (for example, monthly), you will need to perform a pro-rata calculation   ·          $750 per fortnight for all employees who worked less than the 80-hour threshold during both the February and June 2020 periods	Eligible employees for eligible businesses receive: ·          $1,000 per fortnight for all employees who satisfy the 80-hour threshold ·          Your 28 day reference period or periods is based on when your pay cycle ends and therefore won’t be the same for all employers and employees. Use either: ·          The pre-March period which is the 28 days which finish on the last day of the last pay cycle that ended before 1 March 2020; or ·          The pre-July period which is the 28 days which finish on the last day of the last pay cycle that ended before 1 July 2020 If both are applicable then use the higher of the two.   Your employee only needs to satisfy the 80-hour threshold in one of the 28-day reference periods. If they satisfy it in one reference period, then you don’t have to determine if they satisfy it in the other reference periods.   If your pay cycle is longer than 28 days for your employees (for example, monthly), you will need to perform a pro-rata calculation   $650 per fortnight for all employees who worked less than the 80-hour threshold during both the
Eligibility Assessment		Projected turnover For businesses that are not subject to the Major Bank Levy; and ·          whose aggregated turnover of less than $1 billion is projected to be reduced by more than 30%	Actual turnover for Sept 2020 Quarter For businesses that are not subject to the Major Bank Levy; and ·          whose aggregated turnover of less than $1 billion is projected to be reduced by more than 30%	Actual turnover for Dec 2020 Quarter For businesses that are not subject to the Major Bank Levy; and ·          whose aggregated turnover of less than $1 billion is projected to be reduced by more than 30%
Eligibility Assessments Due		Monthly or Quarterly depending on your BAS timing	October 2020 (for Sept Quarter)	January 2021 (for Dec Quarter)
Payment Frequency		Monthly	Monthly	Monthly

The Alternative Tests

The ATO has released 7 alternative tests for businesses to consider in relation to their JobKeeper eligibility which can be applied if they fail the basic decline in actual GST turnover test. If you meet the basic test, you do not need to consider the alternative tests.

The 7 alternative tests are:

1. Business that started after the comparison period started but before 1 March 2020
2. Business acquisition or disposal that changes the entities turnover
3. Business restructure that changed the entities turnover
4. Business that has had a substantial increase in turnover
5. Business affected by drought or natural disaster
6. Business that has an irregular turnover
7. Sole trader or small partnership with sickness, injury or leave

For information on the detailed outline for each of these tests, please click on this link to the https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Actual-decline-in-turnover-test/?anchor=Alternativeturnovertest#Alternativeturnovertest

Alternatives Test 1 – Business that started after the comparison period started before 1 March 2020

This test will only apply if your business started after 1 July 2019 but not after 1 March 2020.

If your business started before 1 February 2020, you must take your average monthly GST turnover for each whole month from when your business started, but only up to 29 February 2020 and multiply this average by 3.  You then compare this number to your September 2020 GST turnover to determine if your turnover has reduced by 30% or more.

For businesses that started in February 2020, you calculate your average monthly GST turnover for February 2020 by dividing your February 2020 turnover by the number of days the business was operating, and then multiplying by 29.

If your business commenced after 1 July 2019 but before 1 December 2019, you can use the total of the months of December 2019, January 2020 and February 2020 as your comparison to the September 2020 quarter.

Alternatives Test 4 -Business that has had a substantial increase in turnover

Where a business has had a substantial increase in its GST turnover since the comparable period of September 2019 quarter under the basic test, a business can apply this test to use a different comparable quarter.

Firstly, you will need to establish that there has been an increase of either 50%, 25% or 12.5% in the 12, 6 or 3 months immediately before the September 2020 quarter or before 1 March 2020.

Test turnover month	Comparison month 50% increase	Comparison month 25% increase	Comparison month 12.5% increase
September 2020 quarter test – June 2020	June 19	December 2019	March 2020
1 March 2020 test – February 2020	February 2019	August 2019	November 2019

Provided your comparison month’s increase is at least the relevant percentage, when compared to the test turnover month, you can use the following quarters as the comparable quarter:

September 2020 quarter test use the June 2020 quarter as the comparable quarter

1 March 2020 test use the February 2020 quarter as the comparable quarter

For example, if your December 2019 GST turnover is at least 25% more then your June 2020 turnover, you can use the June 2020 quarter GST turnover to compare the September 2020 quarter for the 30% actual decline in turnover test instead of the September 2019 quarter as prescribed in the basic test.

In reviewing your eligibility under this alternative test you should assess whether your June 2020 or February 2020 quarter is at least 30% less than your September 2020 quarter.  If not, you won’t be able to apply this alternative test. If it is, then you will need to meet 1 of the 6 monthly comparisons outlined above for you to be able to apply this alternative test.

Alternatives Test 6 -Business that has an irregular turnover

Where a business has irregular quarterly GST turnover, this test can apply, however it cannot apply to businesses that have a cyclical turnover, e.g. fruit growers or Christmas retailers.

There are two components to this test:

You must compare each consecutive quarter in the 12 month period ending either 30 June 2020 or 29 February 2020 and the lowest quarter GST turnover for any of the quarters is at least 50% less than the highest GST turnover quarter in that 12 month period;

If you satisfy step 1, you can compare your September 2020 quarter with the average monthly turnover for the previous 12 months ending 30 June 2020 or 29 February 2020, as applicable, multiplied by 3.  If September 2020 quarter is at least 30% less than your comparable average quarter, you will meet the decline in turnover test.

For example, if the total GST turnover for the 12 months ending 29 February 2020 was $1,200,000, the monthly average GST turnover would be $100,000 and the quarterly average GST turnover for determining the comparable period would be $300,000.  You would then need to assess the four consecutive quarters prior to 1 March 2020.  If the November 2019 quarter was 53% less than the May 2019 quarter, you will be eligible to use the average GST turnover of $300,000 for the comparable period.  You would meet the decline in actual GST turnover if your September 2020 turnover was at least 30% less than $300,000, i.e. no more than $210,000.

Next steps

Provided you meet the actual decline in turnover tests under either the basic test or an alternative test, the following actions are required prior 31 October 2020 to be eligible to claim the October JobKeeper extension 2 payments commencing 28 September 2020:

Date	Action
Now	Assess whether employees are entitled to Tier 1 ($1,200) or Tier 2 ($750) and notify employees about the JobKeeper payment they can expect to receive
28 September 2020	Start paying eligible employees Tier 1 and Tier 2 JobKeeper rates for each fortnight
From 28 September 2020	If you are using single touch payroll to notify the ATO of eligible employees, then you should provide each eligible employee’s Tier as part of the normal pay day reporting. If you are not enrolled for JobKeeper you must lodge your application.
Between 1 and 31 October 2020	Prepare and submit the business’ actual decline in turnover to the ATO and advise business participant Tier 1 or Tier 2
Before 31 October 2020	Ensure the wage conditions for all eligible employees included in the JobKeeper scheme for the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 are met. This means that you have paid them at least Tier 1 or Tier 2 wage amounts excluding superannuation.

If you need some guidance or advice call us on 08 8231 6100 or email:

http://reception@ezralegal.com.au.

Julian Roffe

Practice Manager

Ezra Legal