- Drought-affected NSW businesses can use an alternative test to apply for JobKeeper payments
- The ATO has indicated the NSW Drought Map can be used to assess eligibility
An entity can apply an alternative test to determine its decline in turnover for the JobKeeper payments under section 10 of the Coronavirus Economic ResponsePackage (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020 if the entity conducted some of its business in a declared drought zone, or declared natural disaster zone, during the relevant comparison period.
However, the NSW Government removed declarations of drought in 2013. Accordingly, the NSW Department of Primary Industries (DPI) provides three options to assist producers and/or their advisers determine the non-drought period.
The Australian Taxation Office (ATO) has confirmed with CA ANZ that the NSW Drought Map on the NSW DPI website will be a reliable indicator for the ATO in assessing whether an entity is in drought-declared zone in NSW.
In responding to CA ANZ, the ATO has provided more details on what is ‘drought declared’ in the alternative decline in turnover test.
While acknowledging that the alternative test uses the words “declared drought zone”, the ATO has informed that this test is intended to apply if the entity’s business was conducted not only in an area that was a declared or natural disaster zone during the relevant period comparison period in 2019 but also in an area affected by drought or natural disaster during that period.
An area that was a declared drought zone would include any declaration of drought for that area by a Commonwealth, state, territory or local government agency.
Indicators of an area that was affected by drought would include any identification or acknowledgment by such agencies the area was affected by drought or any other reasonable indicator that the area was affected by drought.
Examples of such indicators would include:
- the National Drought Map
- rainfall statistics for the area recorded by the Australian Government Bureau of Meteorology
- rainfall deficiencies and lowest rainfall records for the area recorded by that Bureau
- in NSW – the Combined Drought Indicator map.
As such, following NSW DPI classifications would be indicators that an area was affected by drought:
- Intense Drought - All three indicators (rainfall, soil water, plant growth) are below the 5th percentile
- Drought - At least one indicator is below the 5th percentile
- Drought Affected (intensifying) - At least one indicator is below the 30th percentile
- Drought Affected (weakening) - At least one indicator is below the 30th percentile.
The ATO is hoping to update its website to provide guidance in relation to these indicators.