[vc_row][vc_column][vc_column_text]Employers are making employment decisions based on an expectation that they will initially get JobKeeper and Cash Flow boosts and, in the post COVID environment not be obliged to repay in all or part (with penalties and interest).

To their credit the ATO have been:

• Providing payment and registration extensions; and
• Significant guidance and new materials on a timely basis

We may not necessarily like all the content but at least we are getting a better understanding as to how incentives will be administered in a COVID and post COVID environment.

Of particular importance are the following new measures/guidance.

Links to all are once again provided below.

Service Entities Amended Rules

The prior announcements relating to service entities added hope that the service entities to operating businesses (where the sales are being made) would be appropriately included.

These entities are common place in professional organisations.

Unfortunately the amendment to the rules is expected to apply narrowly as the relevant class of entities must be part of a ‘group’ structure comprising either:

• A tax consolidated group;
• A tax consolidatable group; or
• A GST group

In our experience many service entities are discretionary trusts or the structure can’t be consolidated or there is no GST group.

If you are fortunate enough to be in the relevant class then the decline in turnover test is then applied to the turnover of this ‘group’ on a modified basis.[/vc_column_text][mk_divider style=”thick_solid” border_color=”#000000″][vc_column_text]JobKeeper Payment- decline in turnover test LCR 2020/1

This is 30 pages of guidance focusing on GST Turnover, the time of supply and methods for determining whether an entity has satisfied the requisite decline in turnover.

Some of the guidance is inconsistent with previous guidance provided on the ATO website particularly with respect to who can use cash or accruals to determine GST turnover.

Fortunately the ATO have stated:[/vc_column_text][mk_blockquote font_family=”none”]It is not our intent to focus compliance resources on circumstances where you have already used guidance on our website in good faith to determine whether you satisfy the decline in turnover test.[/mk_blockquote][vc_column_text]Broadly this new guidance will allow an entity to take a technical approach to allocating supplies between periods or you can adopt the following alternative methods for working out when a supply is made:

• Accrual accounting basis
• GST attribution basis
• Income tax accounting (for those not registered for GST)

Whichever method is used by an entity, it must be appropriately documented and consistently applied to both comparison periods (current and projected turnover) as well as for the entity’s monthly JobKeeper reporting requirements.

Using a GST cash or accruals (non-cash basis)

The current position:

• If you are registered for GST on a cash basis you can use cash or accruals
• If you are registered for GST on an accruals basis, we expect in most cases you would continue to use this method.

• • However if you choose to use cash we may wish to understand why the different approach is an appropriate reflection of turnover
  • We would be more likely to scrutinise calculations by large business in the Top 500 private group program or the Top 100 or Top 1,000 program in Public Groups and International

[/vc_column_text][mk_divider style=”thick_solid” border_color=”#000000″][vc_column_text]Commissioner’s discretion to allow further time for an entity to register for an ABN or provide notice to the Commissioner of assessable income or supplies. PS LA 2020/1

This is part of the integrity rules relating to “eligible business participants” aka business owners.

Many entities may not have an ABN as at 12 March 2020 or failed to provide notice to the Commissioner, of 2019 assessable income or post 1 July 2018 taxable supplies (eg not lodged return or not registered for GST).

There is discretion to allow further time however these discretions will occur in limited circumstances.

The Commissioner will likely grant further time where an entity has not lodged by the relevant due date because either:

• They had a pre-existing lodgement deferral in place or
• They are an new business established from 1 July 2019 where they are not registered for GST but have made supplies prior to 12 March 2020; or
• There are exceptional and unforeseen circumstances, such as the loss of a significant amount of records due to recent bushfires

[/vc_column_text][mk_divider style=”thick_solid” border_color=”#000000″][vc_column_text]Schemes in relation to JobKeeper payment PCG 2020/4

Participation in schemes can result in loss of entitlement of all or parts of the entitlements.

The ATO will administer the law in accordance with this guideline.

The ATO will be concerned with an entity that accesses or increases JobKeeper payment entitlements:

• Where the entity’s business is not significantly affected by external environmental factors beyond its control, and/or
• In excess of those that would maintain pre-existing employment relationships

However, if:

• The external operating environment is affected by factors beyond the control of the entity (and its related parties), and
• That affected external operating environment significantly impacts the business of the entity or another entity the entity’s employees serve in, and
• The entity enters into the scheme in response to that impact and satisfies the decline in turnover test, and
• The JobKeeper payment the entity receives, is for individuals who were employed by the entity and serving in the significantly impacted business prior to that time and who remain employed as a result of that JobKeeper payment, the Commissioner generally will not apply his compliance resources

[/vc_column_text][mk_divider style=”thick_solid” border_color=”#000000″][vc_column_text]Registration and Notice to employees

Registration of employees commenced on 4 May 2020 and employees will need to be confirmed each month.

We remind you of the obligation to inform employees within 7 days of giving the Commissioner their details (Rules 6(4) and expect employees will need to be informed monthly.

Many payroll programs are including this in the payslips and first thoughts are that it may be sufficient notification.

As usual with all of these incentive programs, the devil is in the detail.

Please do not hesitate to contact the Trove team if guidance is needed on any of the above.

[/vc_column_text][vc_column_text]Link to Amended Rules:[/vc_column_text][mk_button dimension=”flat” size=”medium” url=”https://www.legislation.gov.au/Details/F2020L00546″ target=”_blank” margin_top=”10″ margin_bottom=”40″ btn_hover_bg=”#c4b097″]Click here[/mk_button][mk_padding_divider size=”1″][vc_column_text]Link to LCR 2020/1:[/vc_column_text][mk_button dimension=”flat” size=”medium” url=”https://www.ato.gov.au/law/view/pdf/pbr/lcr2020-001.pdf” target=”_blank” margin_top=”10″ margin_bottom=”40″ btn_hover_bg=”#c4b097″]Click here[/mk_button][mk_padding_divider size=”1″][vc_column_text]Link to PS LA 2020/1:[/vc_column_text][mk_button dimension=”flat” size=”medium” url=”https://www.ato.gov.au/law/view/pdf/psr/ps2020-001.pdf” target=”_blank” margin_top=”10″ margin_bottom=”40″ btn_hover_bg=”#c4b097″]Click here[/mk_button][mk_padding_divider size=”1″][vc_column_text]Link to PCG 2020/4:[/vc_column_text][mk_button dimension=”flat” size=”medium” url=”https://www.ato.gov.au/law/view/pdf/cog/pcg2020-004.pdf” target=”_blank” margin_top=”10″ margin_bottom=”40″ btn_hover_bg=”#c4b097″]Click here[/mk_button][mk_padding_divider size=”10″][/vc_column][/vc_row]