Key points on the 'Actual decline in turnover test':

• Actual decline in turnover is now based on "current GST turnover" (not "projected GST turnover").
• The main test is the basic test, but alternative tests are available where the normal comparison period is not appropriate. A modified basic test applies for group employer labour entities.
• Actual decline in turnover test is based on supplies made in the September 2020 quarter (for the first extension), and the December 2020 quarter (for the second extension), compared with the same quarters in 2019.
• You can no longer use all of the other allocation methods in LCR 2020/1.  Now there is only one method you can use to allocate supplies to the test periods. That method is the GST reporting basis - either cash or non-cash - as set out in new 'Timing of Supplies Made' Determination.
• Supplies made in a period are those attributable to the relevant test period in the same way as the entity would report them in the Business Activity Statement (BAS) if they were taxable supplies:
  • If the entity is not registered – you can choose either a cash accounting basis, or an accruals/invoice accounting basis, but you must use the same accounting basis for both periods;
  • If the entity is registered – you must use the method used for GST reporting. Some special rules apply if the entity was not registered for the whole period or changed their GST accounting basis.
• Actual decline in turnover test is based on the same percentages as applied for the original JobKeeper, i.e. generally a 30% decline (or 50% decline for an entity with aggregated turnover > $1 billion, and 15% decline for ACNC-registered charities).  Note – JobKeeper payments are not included in aggregated turnover, as it is ordinary income, but not derived in the ordinary course of business.

Current GST turnover

'Current GST turnover' is defined by s188-15 of the GST Act and modified by the JobKeeper Rules (s8(8)), so is broadly the same as originally except is now based on actuals not projections. JobKeeper payments are not included in current GST turnover as they are not consideration for any supply.
However, two of the biggest policy design-pitfalls arising from the move to the new actual decline in turnover test - which were raised but not addressed during the tax law consultation on these measures - are:

• Financial supplies (e.g. issuing shares) to a non-resident who is not in Australia are GST-free instead of input taxed. This means capital raised from issuing shares to offshore entities will generally be included in current GST turnover. However, for borrowings, the value may not be the full capital amount but a lesser amount. We are seeking guidance on this point; and
• Disposal of capital assets must be counted in current GST turnover (unlike previously because 'projected GST turnover' allowed such disposals to be disregarded – s188-25).

Important differences between JobKeeper GST turnover and BAS turnover

Current GST turnover for JobKeeper may be different to the BAS in important respects. For example, JobKeeper 'current GST turnover':

• does not include GST (it is the GST-exclusive value of supplies), whereas G1 may be GST-inclusive or GST-exclusive and the BAS should indicate this.
• does not include input taxed supplies, whereas G1 includes input taxed supplies in 'total sales'.
• includes the total price of land sold under the margin scheme, whereas the BAS includes only the 'margin' on which the GST is paid.
• does not take into account all GST adjustments – only adjustments that relate to supplies made in the test/comparison period AND where the change in value occurs during that period.  Whereas for a typical GST adjustment in a BAS, the change in value occurs in the period, but the supply was made in an earlier period, so that is not relevant for JK GST turnover.
• does not include bad debt adjustments – they do not change the value of the supply (i.e. writing off the debt only, unless the actual debt is compromised/settled).

CAs should bear these examples in mind when referring to the BAS to compare or seek to determine current GST turnover for JobKeeper purposes. Current GST turnover in the 'actual decline in turnover' context is a separate and distinct calculation and requires its own rules to be carefully applied to get it right.

Related ATO articles

• Actual decline in turnover test
• Basic test
• GST accounting basis that applies to you