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Additional JobKeeper turnover tests registered for businesses that ceased trading

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
13 October 2020 1 minute readShare

The Commissioner of Taxation has registered two additional alternative decline in turnover tests for the JobKeeper extension, which kicked off on 28 September.

The new additional alternative decline in turnover tests apply to businesses where there is not an appropriate relevant comparison period in 2019 due to the business having temporarily ceased trading.

According to the explanatory memorandum, trading must have cease due to events or circumstances outside of the ordinary course of business, for example, where a business that is run from a purpose-built premises ceased trading for an extended period of time to move into a new premises or due to circumstances outside of their control, such as a blackout.

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“Temporarily ceasing to trade includes a business ceasing to make supplies or where it cannot otherwise offer its goods and services to customers. It does not require that the entity stopped carrying on business but requires a suspension of the ordinary activities of the business due to some event or circumstance outside the ordinary course of business,” the ATO has clarified in a notice.

It underlined that temporarily ceasing to trade also has to be for a week or more and that the business had to have resumed trading before 28 September 2020.

 

“Ceasing trade at the end of a business day, on weekends and public holidays or ceasing trade during the off-season of a seasonal business would not satisfy this requirement. These all form part of the ordinary course of the entity’s business,” the ATO said.

“This alternative test will not generally apply where a business ceases trade because its sole trader or partner (in a small partnership) goes on planned leave.”

The first alternative test compares the entity’s current GST turnover (or projected GST turnover) for the applicable turnover test period with the current GST turnover for the same period in the year immediately before the business temporarily ceased trading.

The second alternative test compares the entity’s current GST turnover (or projected GST turnover) for the applicable turnover test period with the current GST turnover of the three whole months immediately before the month that the business temporarily ceased trading or the whole month where the relevant comparison period is a month rather than a quarter.

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The ATO explained that an entity can use either test.

The Tax Office noted that businesses affected by drought or bushfire in the month they planned to use for their entity’s current GST turnover in the alternative test, can use the nearest month before or after the period they experienced the natural disaster.

However, they can only do so if they qualify for the ATO’s bushfires 2019–20 lodgement and payment deferrals, received any concessions given by the ATO or qualified for any Disaster Recovery Funding Arrangements 2018 assistance measures.

The legislative instrument is available here.

Additional JobKeeper turnover tests registered for businesses that ceased trading
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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