{"id":5306,"date":"2020-05-22T06:20:17","date_gmt":"2020-05-21T20:20:17","guid":{"rendered":"http:\/\/www.www.walshaccountants.com\/?p=5306"},"modified":"2020-05-22T09:16:03","modified_gmt":"2020-05-21T23:16:03","slug":"jobkeeper-alternative-test-for-service-entities","status":"publish","type":"post","link":"https:\/\/www.walshaccountants.com\/jobkeeper-alternative-test-for-service-entities\/","title":{"rendered":"JobKeeper – Alternative Test for Service Entities"},"content":{"rendered":"\t\t
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The JobKeeper stimulus has been welcomed as an initiative to help businesses and their staff get through COVID-19 pandemic. \u00a0As our previous articles outline, to qualify a business must have shown reduced turnover of at least 30% when compared to a particular test period<\/p>

More information refer to\u00a0JobKeeper \u2013 What Business Owners Need to Know<\/a>\u00a0<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Medical Business with Service Entities have difficulty meeting eligibility criteria<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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For many medical businesses their structuring arrangements often separate the income earning entity from the employment entity though the use of a service entity; which means that the JobKeeper is ineffective in supporting these businesses, as the service entity may not suffer the necessary 30% decline in turnover in their own right.<\/p>

A specific alternative test has now been released to allow particular service entities to calculate their decline in turnover under modified rules.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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What is a Service Entity? <\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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A service entity is a separate entity that provides services to a related entity that is operating a business. This often includes staff, plant and equipment and business premises with the purpose of providing protection from the risks of the business entity.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Why can Service Entities not meet the JobKeeper Requirements? <\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Services entities are remunerated by the business entity by way of service fee. For many businesses this service fee is based on the costs they incur, plus an additional markup (in line with ATO guidance).\u00a0 For example a service entity that provides premises and staff will often calculated the service fee based on the cost of lease, wages and on costs plus a markup within ATO ranges.<\/p>

Although turnover in the trading entity may have dropped significantly, the service entity may not have experienced the same drop in turnover. Even those that have negotiated rent reduction, may still have equipment costs and staff costs which will continue to be reimbursed by way of service fee, and there for the turnover has not dropped the required 30%.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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What does the alternative test for Service Entities allow? <\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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The alternate test will apply where the service entity provides employees to one or more related entities that derives business revenue from unrelated third parties.<\/p>

The turnover test will compare the test period to the comparison period using the combined GST turnovers of the related entities using the services of the employer entity.<\/p>

While this is good news for some service entities, there is still many professional practices that will miss out<\/p>

The modified rules only apply to service entities that are part of a GST Group or a consolidated group or group that is eligible to consolidate but has not done so. The rule is also limited to those that supply employee labour services to related parties within that the group so will exclude any entities providing employment services to unrelated parties. Other entities may still not qualify due to their income drop being consolidated with less impacted group entities.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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For those businesses that have not yet applied for the month of April, you do still have until 31 May to apply (assuming employees have been paid accordingly) and you are still able to apply for the month of May or a later month if you have met the eligibility criteria at that time.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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How can Walsh Accountants help? <\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Specialising and\u00a0<\/span>Entrepreneurial and Business Support<\/span><\/b><\/a> including with a division specifically for Medicos (Walsh Health<\/a>)\u00a0 \u2013 we\u2019re 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<\/span><\/p>

If you are in need of our assistance, we encourage you to\u00a0<\/span>contact us<\/span><\/b><\/a>\u00a0as soon as possible. If cost is a concern to you, we can work with you.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

The JobKeeper stimulus has been welcomed as an initiative to help businesses and their staff get through COVID-19 pandemic. \u00a0As 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\u00a0JobKeeper \u2013 What Business Owners Need to Know […]<\/p>\n","protected":false},"author":4,"featured_media":5307,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"sfsi_plus_gutenberg_text_before_share":"","sfsi_plus_gutenberg_show_text_before_share":"","sfsi_plus_gutenberg_icon_type":"","sfsi_plus_gutenberg_icon_alignemt":"","sfsi_plus_gutenburg_max_per_row":"","_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_vp_format_video_url":"","_vp_image_focal_point":[],"footnotes":""},"categories":[14,68,64],"tags":[],"acf":[],"yoast_head":"\nJobKeeper - 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