ATO JobKeeper Extension (NNF 2020/180)

With the new ATO Job Keeper Extension 1 and 2 tests that apply post 30 September 2020, IFCBAA points Members to the following information for assistance:

The “Basic Test” details and rules are set out in the following link:

https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Actual-decline-in-turnover-test/?anchor=Basictest2#Basictest2

The “Alternative Test” details and rules are set out in the following link:

https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Actual-decline-in-turnover-test/?page=3#Alternative_test

With the “Basic Test”, from an industry perspective, the following points should be of particular importance to Members when considering whether their business qualifies for these 2nd and 3^rd JobKeeper Schemes:

Steps 1, 2 and 3 as featured within the “Basic Test” rules, if followed as per the ATO’s guidelines, define the historical and current periods to be measured against each other and within that, the definition of what constitutes “Current GST Turnover” for the purpose of reporting key financial Turnover/Sales data to the ATO within the body of what is expected to be a new style of monthly reporting JobKeeper return.

This definition being as follows:

“Current GST turnover” is the amount of your sales except for the following:

• the GST you included in sales to your customers (if any)
• sales that are input taxed sales (for example, bank interest, sale of shares, residential rental income)
• sales not connected with an enterprise that you carry on (for example, sale of private car)
• sales that are not made for payment (unless a taxable supply to an associate)
• payments for no supply (for example, JobKeeper payments)
• gifts and donations (except for deductible gift recipients and ACNC-registered charities as discussed above)
• sales not connected with Australia, for example
      - sales of services made through a business you carry on outside Australia
      - sales of goods purchased and sold from a place outside Australia
      - sale of real property situated outside Australia.

It is IFCBAA’s view that “sales of goods purchased and sold from a place outside of Australia” includes all costs that the Member incurs either directly or indirectly from overseas based companies, in their normal course of business servicing their importer and exporter customers.

That being the case, all “job” related charges that a Member’s business incurs from overseas based businesses such as from shipping lines, overseas agents, etc should be excluded from the Current GST turnover reportable figures for JobKeeper purposes, for all past and current measurable periods.

With the recently developed “Congestion Surcharge” that is now being charged by shipping lines for seafreight, it is IFCBAA’s view that this charge should be classified as an excluded item with reporting revenue for this purpose, even when charged by the Australian office of an overseas based shipping line, due to that charge being forced as part of the overall seafreight cost.

Additionally, noting the general escalation of airfreight costs since the start of COVID-19, it is IFCBAA’s view that all such costs relating to the overseas airfreight movement of Member’s customer’s cargo, also be classified as an excluded item within reporting revenue for this purpose, whether these charges are incurred overseas or within Australia, so as to legitimately “neutralise” the effect of these higher costs between JobKeeper measurement periods, due to them having had the effect of artificially increasing Member’s Revenue, particularly when comparing the current September 2020 quarter to the September 2019 quarter.

Members are reminded of IFCBAA’s past dealings with the ATO in relation to the treatment of Duty for BAS reporting purposes, whereby Duty should be excluded as G1 Revenue with Member’s BAS returns, due to Duty being a Disbursement cost that is paid on behalf of Member’s customers.

IFCBAA has provided the ATO with this interpretation, seeking confirmation on what IFCBAA is proposing.

Should the ATO accept this, then it is likely that “Current GST Turnover” formula for the purposes of GST/BAS reporting under G1, may differ to the “Current GST Turnover” formula for the purpose of a Member business assessing it’s ability to meet the ATO’s tests for JobKeeper Extension 1 and 2 rebate qualification purposes.

Members should not view this stance as being the sole basis on which to determine their business’s ability to claim future JobKeeper Rebates and should seek professional advice from their external accountant prior to considering applying the above.

Scott Carson
Commercial Manager