Since its release in March there have been updates, alternative tests provided, clarified interpretations and deadline extensions.
Key to a successful application is ensuring you use the correct turnover to assess your eligibility. The concept of “turnover” is more closely aligned with GST principles, than accounting or income tax. Within this, it is essential that you correctly apply GST in the right place. For instance, we rely on the idea of “supply” in accordance with the GST legislation. A party that pays the bill may not be the party that receives the “supply” of services from your organisation. This can make a substantial difference to the outcome of your application and we know this has been a particular pain point for many of our clients.
Using the concept of “supply” for the turnover test means that it can be applied by not for profit and for profit organisations alike. However, various modifications necessary for JobKeeper to apply as broadly as possible, means that the ATO may not be able to verify these figures against Business Activity Statements. Additionally, it should also be noted that the JobKeeper Rules provide eligible entities the ability to use a number of alternative methods to allocate turnover to particular periods when determining whether the appropriate decline in turnover percentages have been met. The ATO will accept methods outlined in the GST Act such as GST accruals and GST cash basis of accounting. In addition, the ATO has also introduced methods such as income tax accounting and accrual accounting which are not available under the GST Act.
The ATO will be reviewing applications, and any JobKeeper payments made to an organisation that is later found to be ineligible will need to be paid back with interest. It is therefore essential to ensure your application is correct. If you have already made an application and would like to check your figures, you can resubmit.
To read more about how the turnover test works you can read more on our JobKeeper hub. Grant Thornton are available to provide a detailed analysis based on your personal circumstances to ensure your application is correct and are developing an automated tool that will validate your calculations.
Can independent schools access JobKeeper?
Yes – although independent schools registered with the Australian Charities and Non-for-profits Commission (“ACNC”) do not qualify for the 15% decline in turnover test, they are still eligible to claim JobKeeper where they can demonstrate a turnover decline of 30%.
In order to qualify from the current JobKeeper fortnight (being the period from 25 May 2020 to 7 June 2020), the relevant periods which might demonstrate the decline are:
- the month of June 2020 (projections will need to be used that are based on valid assumptions to demonstrate this using the monthly decline model); or
- the quarter from April – June 2020 (projections will need to be used that are based on valid assumptions to demonstrate this using the quarterly decline model).
Whilst ACNC registered charities may elect to exclude government grants/revenue from the turnover test, this election is not available to universities and non-government schools. Therefore, many schools have assumed that they will not be eligible for JobKeeper payments on the basis of the level of government revenue that is expected to be received.
However, in line with the entire education sector, the operating environment of many non-government schools has been significantly impacted and this has severely restricted the ability to provide education to students. Further, as a result of having been forced into remote learning, a large part of the planned curriculum and extracurricular activities have not been offered. We are seeing a number of factors that may mean the 30% decline in turnover will be met, including:
- waivers/discounts or extension of payment terms offered to affected families that are experiencing financial hardship;
- loss of external rental activities (i.e. of gymnasiums, pools and other school facilities);
- a decline in sports and subject levies;
- a decline in boarding fees and tuition fees from international students;
- reduced tuckshop and uniform sales; and
- reduced donations from benefactors.
To find out how Grant Thornton can support your school with respect to confirming eligibility for the JobKeeper payments, please get in touch with one of our specialists below. At any time you can go to our JobKeeper hub for up to date information and insight about the JobKeeper hub.