RSM Australia

JobKeeper and record keeping – what you need to know about projected GST turnover

Tax Insights

JobKeeper payments are now trickling in to give a much-needed boost to the cashflow of eligible businesses which is a cue to remind businesses of the compliance and that it is critical to ensure records are reasonable enough to substantiate any future queries.

JobkeeperTo be eligible for the JobKeeper payments, the entity will need to provide details of its GST turnover in most cases.

The reduction must be at least 30 percent or more for most businesses and the calculation typically involves working out whether the projected GST turnover for a period is less than the current GST turnover for the relevant comparison period.

Important things to note are:

  • The decline may have had nothing to do with the COVID-19 pandemic
  • If the decline is reversed the following month/quarter – the entity will still be entitled to JobKeeper payments throughout the time it is available.

Predicting the supplies that a business is likely to make in the month or quarter may be a difficult exercise where things are changing on a daily basis.

The ATO will accept a calculation based on a genuine business plan, accounting budget, or some other reasonable estimate based on the evidence about the projected facts and circumstances for the remainder of the turnover test period. 

A reasonable assessment may include:

  • Calculations prepared by personnel with experience and knowledge of the business and forecasting future business performance.
  • Senior and experienced personnel review and sign-off the calculation of projected GST turnovers.
  • Documentation explaining variances between the projected and actual outcomes and evidence these have been followed. The higher the variance, the greater the documentation in relation to it.

Relevant evidence that would support such assessments made may include:

  • Decreases in sales as a result of customers canceling or modifying existing contracts due to the COVID-19 pandemic.
  • Businesses being required to close or trade on a limited basis due to government COVID-19 restrictions.
  • Delays in being able to get access to trading stock sourced from interstate and/or overseas on or from 1 March 2020. 
  • Evidence of the business’s reliance on tourism, sports, entertainment, hospitality and even financial markets as these industries have been affected the most by COVID-19.     
  • Economic forecasts undertaken by reputable organisations that are relevant to the particular business.
  • The likely timing of government COVID-19 restrictions being lifted for the particular type of business based on government announcements and it’s ongoing impact. 

JobkeeperThe ATO sets out in LCR 2020/1: JobKeeper payment - decline in turnover test further guidance on the practical compliance approaches that an entity can apply to calculate its turnover.

According to the ATO, when the entity makes a good-faith estimate to comply and a good-faith decision that it’s eligible, the Commissioner will be understanding of the position taken.

A word of caution – if there is evidence to suggest schemes to gain access to the JobKeeper payments, the ATO can seek to rely on the anti-avoidance provision (section 19 of the Coronavirus Act) to reverse payments, including penalties.     

How can RSM help?

We can provide further assistance and guidance in determining your eligibility for JobKeeper payments including assessing declines in turnover.  Contact your local RSM adviser today.

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