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The ATO has now registered an additional alternative decline in turnover test for the JobKeeper extension.
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Commissioner registers new JobKeeper alternative test
12 October 2020
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The Commissioner of Taxation has now registered additional alternative decline in turnover tests where there is not an appropriate relevant comparison period in 2019 because the entity temporarily ceased trading and was not trading for some or all of the relevant comparison period.
The Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Amendment Rules 2020 sets out two alternative tests where trading ceased due to events or circumstances outside of the ordinary course of business.
The first alternative test compares the entity’s current 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 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.
The new tests account for entities that ceased trading to move premises or where events and circumstances are outside of their control, such as a blackout.
However, they only apply for entities that temporarily ceased trading for a period of not less than a week.
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“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,” said the explanatory statement.
“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 the requirement that ceasing trading is because of an event or circumstance outside the ordinary course of the entity’s business.
“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 for all or part of the relevant comparison period.”
CPA Australia tax policy adviser Elinor Kasapidis said the original alternative test instrument was not suitable for a business that was not trading during the comparison period.
“The additional alternative test is a practical response to a situation where a business has ceased trading for a period and needs access to a modified comparison period,” Ms Kasapidis told Accountants Daily.
“The alternative test is likely to have only limited application, as it requires trading to cease due to events or circumstances outside of the ordinary course of business.
“We are pleased to see the ATO moving quickly to respond to issues identified during implementation by amending these tests.”
View the new alternative tests legislative instrument here.
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