By Jothan Lian / 23rd Oct 2020
Accountants assisting clients with the JobKeeper extension have been urged to pay close attention to the actual decline in turnover test, with the ATO unable to offer leeway for those who come just shy of the requirements.
With JobKeeper now requiring entities to satisfy the new actual decline in turnover test, rather than the projected decline in turnover test used earlier in the program, the ATO will be required to follow the strict letter of the law in ensuring the requisite percentage declines are satisfied.
"[In JobKeeper 1], the legislation didn't require the actual turnover to decline, so we saw a lot of organisations make a projection in a very difficult environment... and a lot of those projections didn't pan out and that's fine," said ATO assistant commissioner Sandra Farhat on a recent ChangeGPS webinar.
"But moving into the extension, that is the test; the test is an actual decline.
"There is really no discretion in relation to decline in turnover, so there is no ability for the ATO to say, 'Well, you were close, just not close enough, but we'll let you through' — the 30 per cent is a hard and fast legislative requirement.
"It is a significant change from a projected decline in turnover to an actual decline in turnover."
The approach is a shift from the "sympathetic and understanding" stance that the ATO committed to earlier in the year when queried on how it would police the projected decline in turnover estimates.
ATO second commissioner Jeremy Hirschhorn told a Senate inquiry in May that the ATO would not nitpick turnover estimates that fell just short of the requirements because the law had merely required entities to make a reasonable estimate.
"If it ultimately turns out that the estimate was overly pessimistic and a business only went down 29 per cent, instead of an estimated 35 per cent, that is OK; what the legislation requires is a reasonable estimate," Mr Hirschhorn said earlier this year.
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