Late on Friday, Treasurer Josh Frydenberg registered the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 2) 2020, which sets out a modified decline in turnover test for those that provide employee labour to group members.
According to the legislative instrument, employer entities have the principal activity of supplying other members of the group with services and do not typically have significant dealings outside the group, meaning their turnover may not reflect the overall performance of the group.
For an employer entity to be eligible for JobKeeper, it needs to be supplying “employee labour services to one or more members of the group that have as their principal activity the making of supplies to entities other than members of the group”.
Furthermore, it must not supply employee labour services to entities that are not members of the group.
In this case, the legislative instrument reads, instead of using the employer entity’s projected GST turnover for the turnover test period, the sum of the projected GST turnovers for that period of each test member is to be used.
Furthermore, the modifications set out that the sum of the current GST turnovers for a relevant comparison period of each test member is to be used, instead of the employer entity’s current GST turnover.
“This ensures that the decline in turnover test is applied to group members that predominately undertake transactions with external entities on an arm’s-length basis rather than measuring the decline in intergroup transactions,” the explanatory statement reads.
The modified test will also deal with circumstances in which the alternative decline in turnover test applies — this might be used for a new business or a business that made a major business acquisition in 2020.
An employer entity can be a member of a consolidated group, a consolidatable group or a GST group and satisfy the modified test in relation to its membership of any of those groups.
Nomination criteria
The legislative instrument also makes slight amendments to the employee nomination criteria, citing that employers must provide their employees with an employee nomination notice within seven days of enrolling in JobKeeper.
“The notice must be given within seven days of the entity notifying the commissioner of the entity’s election to participate, or such later time as the commissioner allows; and state that the individual must give the entity a nomination notice referred to in paragraph 9(3)(a) if the individual agrees to be nominated by the entity as an eligible employee of the entity; and include information about the steps the individual can take to give the entity the nomination notice.”
According to the explanatory notice, the intention of this is to give all employees of an entity the opportunity to agree to be nominated for the purposes of the entity’s participation in the JobKeeper scheme.
“This is consistent with the ‘one in, all in’ operation of the scheme,” the notice reads.
If an entity nominates employees but refuses or fails to comply with the requirement to provide a nomination notice, the entity then contravenes the taxation law, which makes it an offence to fail to give a document to another person that is required under the taxation law.