JobKeeper setup can be difficult to navigate. Read through our quick Jobkeeper guide for the…
JobKeeper Payment Eligibility Alternative Tests: What’s to Know
The JobKeeper payment can help your business retain employees during the coronavirus pandemic — but what are the qualification requirements?
What are the tests for the JobKeeper payment eligibility? The JobKeeper payment, announced by the government in March 2020, is a $130 billion scheme designed to help eligible employers, sole traders and other entities that have been significantly affected by coronavirus (COVID-19) to pay employee salaries and wages.
Determining whether your business qualifies for the JobKeeper Payment can be difficult — especially if your business is a high-growth company or a startup.
The original test requirements that must be met in order to qualify for the JobSeeker payment determines eligibility based on the projected turnover of a business compared to turnover in the same period, in the previous year.
This qualification process, however, fails to take into account newly launched startups or companies that have experienced rapid growth in the last year.
In April 2020, the Australian Government released new legislation that introduces a number of alternative tests that can be used to qualify for the JobKeeper payment, along with an explanatory statement.
- These new alternative tests can help businesses that may not previously have been eligible for the JobKeeper Payment, which includes:
- New businesses or startups
- High-growth businesses
- Businesses affected by natural disasters or drought
- Sole traders or small partnerships
- Businesses that have undergone restructuring
- Businesses with irregular turnovers
What is the JobKeeper Payment?
The JobKeeper payment is administered by the Australian Taxation Office, and is available to eligible businesses from 30 March 2020 to 27 September 2020.
The payment is designed to help Australian businesses that have been impacted by the coronavirus (COVID-19) pandemic to pay the wages or salaries of employees.
Businesses interested in the JobKeeper Payment must first apply and complete an eligibility test. The ATO will provide eligible businesses with a JobKeeper Payment for each eligible employee. Detailed information on the JobKeeper payment is available via the ATO website.
What Are the Jobkeeper Alternative Tests and How Do They Work?
The basic JobKeeper Payment eligibility test in which businesses compare projected turnover in a period affected by the pandemic against the same period last year may not be appropriate for all business types.
The Australian Government has released a number of alternative tests that can be used by businesses that may not be able to use the basic test. These alternative tests present alternative comparison turnovers in either monthly or quarterly periods.
Eligibility is calculated by comparing turnover in a “test period”, or the period in which the business is affected by the coronavirus (COVID-19) pandemic, against a “comparison period,” which varies across alternative test types.
Here’s how the new alternative JobKeeper Payment eligibility tests work:
New Business JobKeeper Alternative Test
The new business alternative test applies to business entities that commenced business activities after the 2019 comparison period, but before March 2020.
- The comparison periods turnover of the new business alternative test can be calculated on a quarterly or monthly basis.
- Monthly: turnover in the quarterly comparison period is calculated as the average monthly turnover since the business commenced or a 3-month period before March 2020, divided by 3.
- Quarterly: turnover in the quarterly comparison period is calculated as the average monthly turnover since the business commenced multiplied by 3, or a 3-month period before March 2020
High Growth Business JobKeeper Alternative Test
- In order to be eligible for the high growth business JobKeeper alternative test, a business must have increased turnover by either:
- 50 percent in the last 12 months;
- 25 percent in the last 6 months, or;
- 12.5 percent in the last 3 months
- The comparison periods turnover of the high growth business alternative test can be calculated on a quarterly or monthly basis.
- Monthly: turnover in the last 3 months before the test period, divided by 3
- Quarterly: turnover in the three months directly preceding the test period
Recent M&A or Restructuring JobKeeper Alternative Test
- This test is only applied to businesses that have recently undergone restructuring, disposal, or acquisition. The comparison periods turnover of this test can be calculated on a quarterly or monthly basis.
- Monthly: turnover in the month immediately after restructuring, disposal, or acquisition occurred
- Quarterly: turnover in the month immediately after restructuring, disposal, or acquisition occurred, multiplied by three
If your business has undergone multiple restructures, disposals, or acquisitions, the comparison must be performed against the turnover of the entity’s new setting. The relevant comparison period is generally the month after the most recent restructuring, disposal, or acquisition.
If there has not yet been an entire month since the most recent restructuring, disposal, or acquisition, the comparison period is the month immediately before the event.
Drought or Natural Disasters JobKeeper Alternative Test
- This test is applied to businesses located in a declared zone with turnover that has been affected by drought or natural disaster.
- Monthly: calculated as the turnover in the same month in the year prior to declaration
- Quarterly: calculated as the turnover in the same quarter in the year prior to declaration
Irregular Turnover JobKeeper Alternative Test
- This test is applied to businesses with irregular turnover, which is defined as entities for which the lowest turnover quarter is 50 percent less than the highest in the last 12 months. It’s important to note that this test is not applied to ‘cyclical’ businesses.
- Monthly: calculated as the average monthly turnover of the last 12 months
- Quarterly: calculated as the average monthly turnover of the last 12 months, multiplied by 3
As noted above, this test is not applied to ‘cyclical’ businesses. Cyclical businesses include businesses that experience regular seasonal variance in turnover. For businesses that meet this description, such as agricultural businesses, this variance is within normal business operation and renders the entity ineligible for the irregular turnover alternative test.
Sole Trader or Small Partnership JobKeeper Alternative Test
- Sole traders or small partnerships with no employees may apply for an alternative test if turnover has been affected by a sole trader or partner is not working due to injury, sickness, or leave.
- Monthly: calculated as the turnover in the month directly after the affected party returned to work
- Quarterly calculated as the turnover in the month directly after the affected party returned to work, multiplied by 3
What if My Business Meets the Requirements of Multiple Tests?
Your business only needs to meet the requirements of a single test in order to apply for the JobKeeper Payment. If your business satisfies the requirements of multiple tests, it does not affect your ability to apply for the JobKeeper Payment.
Is the JobKeeper Payment Available to Pre-Revenue Startups?
The Australian Government has not announced any JobKeeper payment eligibility alternative tests designed for pre-revenue startups. The alternative tests currently available rely on turnover comparison, which is not available to pre-revenue startups.
If your business did not meet the requirements outlined in the first JobKeeper payment eligibility test, it’s possible that the new alternative tests may apply to your business.
The purpose of these new alternative tests for JobKeeper payment eligability is to ensure that all types of Australian businesses are accounted for, making it possible for high-growth businesses, new businesses, and businesses in other specific scenarios are able to retain employees during the economic impact of the coronavirus pandemic.
If you’re not sure which alternative test is right for your business or are unsure whether your business qualifies for the JobKeeper Payment, reach out to Fullstack for detailed guidance today.
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Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, crypto and entrepreneurs.