With the employee test date for JobKeeper moved to 1 July 2020, some additional employees might have become eligible for JobKeeper. The August JobKeeper monthly business declaration is due by 14 September and is different to the previous form as it covers three JobKeeper fortnights.
Employers need to ensure that they identify all additional employees who could be eligible for JobKeeper to ensure that they comply with the “one in, all in” principle and that they meet the nomination requirements.
The first round of JobKeeper ends on 27 September 2020. To receive JobKeeper from 28 September 2020, employers need to reassess their eligibility with reference to actual GST turnover for the September 2020 quarter (for JobKeeper payments between 28 September to 3 January 2021), and again for December 2020 quarter (for payments between 4 January 2021 to 28 March 2021). However, we are still waiting on the rules relating to these periods to be released.
From this date, the JobKeeper payment rate will reduce and split into a higher and lower rate based on the number of hours the employee worked.
Question of the month
My business received a grant from the State Government. Do I pay tax on it?
Short answer; probably.
Grants are likely to be taxable unless they are specifically excluded from tax.
If the grant relates to your continuing business activities, then it is likely to be included in assessable income for income tax purposes. The position can be different in cases where the payment is made so that the entity can commence a new business or cease carrying on a business.
Government grants are not generally subject to GST unless the grant is for a supply of something. The ATO has indicated that the cashflow boost and JobKeeper payments are not subject to GST, this seems to be on the basis that they are not consideration for a supply.
Normally, we look at whether the entity has to do something to obtain the payment / grant. This could include entering into an agreement to do something or refrain from doing something. If not, there won’t generally be any GST because no supply is or has been made.
JobKeeper turnover calculations
If GST does not apply to the grant, then it should not be included in the decline in turnover test for the initial phase of JobKeeper or the GST turnover figures that are reported to the ATO on a monthly basis by entities that are participating in JobKeeper.
The exception is the university sector where core Commonwealth Government financial assistance provided is included in the JobKeeper turnover tests.
Note:The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.