The JobKeeper stimulus has been welcomed as an initiative to help businesses and their staff get through COVID-19 pandemic. As our previous articles outline, to qualify a business must have shown reduced turnover of at least 30% when compared to a particular test period
More information refer to JobKeeper – What Business Owners Need to Know
For most businesses who have elected to nominate for the month of April 2020, the comparison period was the month 12 months before the test period, eg March or April 2019
Rural Businesses have difficulty meeting eligibility criteria
For some farmers and businesses in rural areas, this has resulted in difficulty meeting the basic eligibility criteria, because during that period in 2019, their income had been negatively impacted by drought.
In fact, during March 2019, over 58% of QLD was drought declared and 99.9 % of NSW was in drought, according to the state governments combined Drought Indicator.
JobKeeper Alternative Tests Specifically for drought affected businesses
The alternative tests do provide some relief for this, with a specific clause for businesses affected by drought or natural disaster as well as subsections for each of the other alternative tests that provide special allowance for businesses that were in receipt of Drought Help Concessions from the ATO.
To help clarify we outline how the alternative tests would apply for drought affected businesses to ensure that those that are eligible can gain access to the subsidy.
Business affected by drought or natural disaster
Where an entity conducted business or some of the business in a declared drought zone, or declared natural disaster zone, during the relevant comparison period, and this has affected the entity’s turnover during that period, the alternative test uses the entity’s turnover for the same period in the year immediately before the drought declaration.
For a new business the alternative tests allow you to either use the average monthly turnover for the entities existence or average for the quarter immediately preceding the test month as the comparison turnover. If the business was in receipt of Drought Help concessions, in calculating the comparison turnover you then exclude the months covered by the Drought Help concessions from the calculation, unless those are the only months since the entity commenced the business.
Business Acquisition or Business Restructure
If an entity acquired or disposed of part of their business Or has restructured after the normal comparison period, use the month immediately after the acquisition, sale or restructure as the comparison period.
Businesses who received Drought Help concessions, will exclude the months covered by the Drought Help concessions and use the nearest month before or after the event as appropriate, unless the months covered by the concession are the only months available.
If the entity has experience a substantial increase in turnover (50% in 12 months, 25% in 6 months or 12.5% in 3 months) you use the monthly average of the 3 months immediately before the test period as the comparison period.
Where Drought Help concessions apply, use the 3 month period before this concession commenced to calculate the 3 months’ turnover.
Business has an irregular turnover
For non cyclical turnover where one quarters in the past 12 months is no more than 50% of the the highest quarter, use the monthly average turnover for the previous 12 months as comparison.
If the business received Drought Help concessions, then exclude the months covered by the Drought Help concessions from the calculation.
Sole trader or partnership taking time off with sickness, injury or leave
Where business owner did not work for part of the year, use the month immediately after the sole trader or partners returned to work.
Where Drought Help concessions were relevant in the month immediately after the month in which the sickness, injury or leave occurred, then use the month immediately after the last month covered by the Drought Help concessions.
For those businesses that have not applied for the month of April, you do still have until 31 May to apply and you are still able to apply for the month of May or a later month if you have met the eligibility criteria in that later month.
How can Walsh Accountants Help?
Specialising and Entrepreneurial and Business Support including for rural businesses – we’re here to help you throughout this period of instability. This is uncharted territory for all of us but we are here to assist you with all the knowledge we have to help you adapt to the changing environment and keep your business afloat
If you are in need of our assistance, we encourage you to contact us as soon as possible. If cost is a concern to you, we can work with you.