In announcing the $130 billion JobKeeper program on Monday, the Treasurer set out clear eligibility requirements including a 30 per cent fall in revenue for businesses with turnover below $1 billion, and 50 per cent for those with turnover greater than $1 billion.
However, following concerns that many employers could miss out, given that some may not have been operational a year earlier or that their turnover may not have been representative of their usual turnover, the tax commissioner has now been given the discretion to make the final call.
According to the updated requirements, the tax commissioner will be allowed to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the coronavirus.
The tax commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances. Treasury explained that eligibility may be established as soon as a business ceases or significantly curtails its operations.
There will also be some tolerance where employers, in good faith, estimate a greater than 30 per cent (or 50 per cent) fall in turnover but actually experience a slightly smaller fall.
It is hoped that these amendments will assist businesses that have not operated for a full year, businesses that have employees but do not generate revenue, and businesses that engage employees via a related service entity.
Responding to the updates, Tracey Dunn, RSM associate director, told My Business that this is a game changer for businesses that saw the JobKeeper payment as a lifeline, but could not satisfy the reduction in turnover test originally proposed by Treasury.
“The change in position is very welcome and indicates Treasury is listening to concerns raised by practitioners and professional bodies and responding quickly to ensure as many employers can access the payment as possible,” Ms Dunn said.
She pointed out, however, that it is not clear yet how and when businesses will be able to seek the commissioner’s discretion.
“Given the cash-flow pressure on businesses to retain or re-engage employees, it would be helpful if the ATO could provide this guidance as a matter of urgency,” Ms Dunn said.
Recognising that businesses are desperate for a lifeline, and given that the JobKeeper payments will not be paid until after 1 May 2020, Ms Dunn advised business owners to engage with practitioners immediately to consider cash-flow requirements and to identify any stimulus or ATO administrative concessions that may assist in keeping their business operating.