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1Pitcher Partners is an association of independent firms.
A recording of this webinar and all slides used in this session
will be sent out to all registered participants
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please contact our Events team at rsvp@pitcher.com.au
Craig Whatman, Partner
Understanding JobKeeper Part 2: Calculating GST turnover
April 2020
Pitcher Partners Advisors Proprietary LimitedABN 80 052 920 206
3Pitcher Partners is an association of independent firms.
Important information
This presentation (‘Presentation’) has been produced by Pitcher Partners Advisors Proprietary Limited and has been prepared for informational
and discussion purposes only. The information provided in this document is of a general nature and has been prepared without taking into
account your objectives, circumstances, financial situation or particular needs. This Presentation does not constitute personal advice.
This Presentation has been prepared by us in the ordinary course of our profession. In providing this Presentation, we are not purporting to act
as solicitors or provide legal advice. Appropriate advice should be sought prior to acting on anything contained in this Presentation or
implementing any transaction or arrangement that may be referred to in this Presentation.
Information contained within this Presentation is based on the relevant law and its interpretations by relevant authorities as it stands at the time
the information is provided. Any changes or modifications to the law and/or its interpretation after this time could affect the information we have
provided.
This Presentation, or any part thereof, must not be distributed, copied, used, or relied on by any person, without our prior written consent.
To the maximum extent permitted by law, Pitcher Partners will not be liable for any loss, damage, liability or claim whatsoever suffered or
incurred by any person arising directly or indirectly out of the use or reliance on the information contained within this Presentation.
Pitcher Partners is an independent member of Baker Tilly International. Baker Tilly International Limited is an English company. Baker Tilly
International provides no professional services to clients. Each member firm is a separate and independent legal entity, and each describes
itself as such. Pitcher Partners is not Baker Tilly International’s agent and does not have the authority to bind Baker Tilly International or act on
Baker Tilly’s behalf. None of Baker Tilly International, Pitcher Partners, not any of the other member firms of Baker Tilly International have any
liability for each other’s acts or omissions. The name Baker Tilly and its associated logo is used under license from Baker Tilly International
Limited.
Pitcher Partners is an association of independent firms.
Any trademarks, logos, and service marks contained herein may be the registered and unregistered trademarks of their respective owners.
Nothing contained herein should be construed as granting by implication, or otherwise, any license or right to use any trademark displayed
without the written permission of the owner.
Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners Advisors Pty Ltd
4Pitcher Partners is an association of independent firms.
Who is eligible?
How do you assess
your eligibility?
When do you assess
your eligibility?
How do you determine turnover?
What is projected GST turnover?
Turnover and BAS reporting
The risk of getting it wrong
Ongoing compliance
5Pitcher Partners is an association of independent firms.
Overview
Stimulus estimated to cost $130b over a 6 month period
Key aspects of the scheme
Register interest in scheme from 30 March 2020 on ATO website
https://www.ato.gov.au/Job-keeper-payment/
Employers (or their tax agent) can enrol from 20 April 2020
Eligible Employers
Payable to eligible employers
and non-employer businesses (e.g. self-
employed) who have requisite decline in their
turnover during the relevant period
Eligible Employees
Payment of $1,500 (gross before tax)
to each employee who is employed by an
eligible employer
6Pitcher Partners is an association of independent firms.
Who is eligible?
An entity will satisfy the decline in turnover test when compared to
the same month or quarter in 2019 if the entity is
Decline in turnover thresholds
An ACNC-registered charity
(excluding universities and
schools) and its turnover has
decreased by at least 15%
Any other entity and its
turnover has decreased
by at least 30%
An entity that has aggregated
turnover of more than $1b
and its turnover has
decreased by at least 50%
7Pitcher Partners is an association of independent firms.
How do you test a decline in
turnover?
Two ways an entity may satisfy
a decline in turnover test
Basic test
Alternative test
8Pitcher Partners is an association of independent firms.
How do you test a decline in turnover?
Requires a comparison between the test period and a comparison period
Basic Test
The turnover test period must be
• a calendar month that ends
after 30 March 2020 and before
1 October 2020
or
• a quarter that starts on 1 April or
1 July 2020
The relevant comparison period
must be the period in 2019 that
corresponds to the test period –
e.g. if testing April 2020, you must
compare with April 2019
The employer can choose an eligible month or quarter as a test period
irrespective of whether they lodge their BAS monthly or quarterly
The test only needs to be satisfied in one test period
9Pitcher Partners is an association of independent firms.
How do you test a decline in turnover?
The Commissioner may determine an alternative test for a class of entities by way of
legislative instrument or take other factors into account for individual entities
Alternative test
Where a business was
not in operation
a year earlier
The turnover for the
prior year was not
representative of the
entity’s usual or
average turnover
e.g. because of drought,
or their turnover is typically
highly variable
The Commissioner has
discretion to consider
additional information
that the business can
provide to establish
that they have been
adversely affected
by COVID-19
10Pitcher Partners is an association of independent firms.
How do you calculate your turnover?
Projected GST turnover is the sum of the value of all supplies
an entity has made or is likely to make, during the relevant period
Projected GST turnover
The relevant period for JobKeeper purposes = the test period (month or quarter)
What to include
Taxable supplies
GST-free supplies
What to exclude
Input taxed supplies
e.g. residential rents
and income from
financial supplies
Supplies for nil
consideration provided
they are not taxable
under the associate rules
Supplies not connected
with the enterprise
Supplies not connected
with the indirect tax zone
(Australia)
11Pitcher Partners is an association of independent firms.
How do you calculate your turnover?
Special modifications for the JobKeeper Payment
• The relevant period is the month or quarter test period and comparison period
• Supplies between members of the same GST group are included
• Each external territory is treated as forming part of the indirect tax zone
Projected GST turnover
An entity that is a DGR –
each gift described in 30-15 ITAA
and received, or likely to be
received (e.g. a donation) is to be
treated as consideration for
a supply, the value of which is
equal to the amount of the gift
ACNC-registered charities
who are not DGRs must include
gifts received or likely to be
received by way of monetary
donation, gifts of property with
a value greater than $5,000 and
listed Australian shares
12Pitcher Partners is an association of independent firms.
How do you calculate your turnover?
• A defined term for GST purposes
• Equals the GST exclusive consideration
received in relation to a supply
What is the ‘value’ of supplies
Don't rely on what has been reported on the BAS!
The value of all supplies that an entity has made will not
necessarily be the amount that is reported at G1 on the BAS
VALUE
13Pitcher Partners is an association of independent firms.
Checklist of issues
to consider when calculating
your turnover
Margin scheme supplies
GST groups
Associates
Out of scope income
Insurance settlements
Input taxed supplies
14Pitcher Partners is an association of independent firms.
Checklist of issues
to consider when calculating
your turnover
GST-free supplies
Barter transactions
Supplies of private assets
Supplies made as agent
Incorrectly registered entities
15Pitcher Partners is an association of independent firms.
Incorrectly registered entities
A partnership return is not lodged and
each joint venture party includes 50% of
the value of each rent payment as a
taxable supply in their own BAS
EXAMPLE 1
Impact
Likely to constitute a partnership
for GST purposes
The JV entities may not meet the
threshold test of carrying on an
enterprise in their own right or
may not meet the decline in
turnover test
BusCo1 BusCo2
Commercial
rental property
Joint bank
account
Managing
agent
50% 50%
16Pitcher Partners is an association of independent firms.
GST turnover
How should cash basis accounting entities calculate their turnover?
Cash vs Accruals
Cash basis accounting
Timing of when amounts reported on
BAS driven by when payment is received,
not when invoices are issued
Attribution of GST on BAS may differ
to value of supplies made in a period
Accruals accounting
Timing of when amounts reported on BAS
driven by when invoices are issued, unless
payment is received first
17Pitcher Partners is an association of independent firms.
Cash vs Accruals
TradeCo is under the $10m threshold and
accounts for GST on cash basisImpact
Should TradeCo compare their
invoiced amounts or cash
collections when testing their
decline in turnover?
GST turnover rules refer to
supplies made in a period
But no time of supply rule in GST
Act, only attribution rules
Clarification needed from ATO
EXAMPLE 2
April 2019
$500,000 of sales
invoiced
$300,000 collected
in cash for prior
months' sales
April 2020
$300,000 of sales
expected to be
invoiced
$290,000 expected
to be collected in
cash for prior
months' sales
18Pitcher Partners is an association of independent firms.
GST turnover
Adjustment events may cancel a supply or change
the consideration for a supply
Adjustments
How does an adjustment impact the value of a supply?
Timing
Adjustment
events occurring in
a later tax period
GST-free supplies Credits and
discounts
Bad debts
19Pitcher Partners is an association of independent firms.
Comparable periods
Sales in April 2019 = $400,000
Expected sales in April 2020 = $350,000
This represents a decline of only 12.5%
Is this the correct result?
What if ServiceCo delays its 30 April 2020
invoice to 1 May 2020?
Impact
Do you apportion the weeks in
this case?
To what extent can an entity
change its invoice dates to
achieve a better result?
EXAMPLE 3
ServiceCo invoices its clients on a weekly basis
each Thursday
April 2019
4 Thursdays
with $100,000
invoiced
each Thursday
April 2020
5 Thursdays
with $70,000
invoiced
each Thursday
20Pitcher Partners is an association of independent firms.
How do estimate your turnover for the test period?
On the balance of probabilities, it can be predicted
a supply is more likely than not to be made
What is ‘likely to be made’?
Commissioner has power to determine which methods an entity
may use to determine if a supply is likely to be made
Based on an ‘objective assessment’ of the entity’s prospects, one that a reasonable
person would make having regard to the facts and circumstances (GSTR 2001/7)
Bona fide business
plans and budgets
Growth patterns Existing and
prospective contracts
21Pitcher Partners is an association of independent firms.
The risk of getting it wrong
Impact
Did the entity satisfy the basic
decline in turnover test?
Is the entity eligible for the
Jobkeeper payment from April?
What if the actual GST turnover
for April was $900,000?
Overpayment debt risk
Penalties
Interest
EXAMPLE 4
ProjectedGST turnover
ActualGST turnover
$1mApril 2019
$600,000 April 2020
$720,000April 2020
22Pitcher Partners is an association of independent firms.
The risk of getting it wrong
Evidence establishing how projected GST turnover was calculated will be
crucial to supporting an entity’s eligibility for the payment
Supporting documents
Examples
Business plans Budgets Current and
future contracts
23Pitcher Partners is an association of independent firms.
Administrative requirements
Ongoing compliance
Must report current GST turnover for
reporting month and projected GST
turnover for following month to the
Commissioner within 7 days of the end
of each calendar month
Administrative requirement only,
there is no requirement to assess eligibility
on an ongoing basis
Ensure what is reported is accurate
as reported figures could be used in post
scheme reviews of businesses
24Pitcher Partners is an association of independent firms.
Process for reviewing GST turnover
01
02
03
04
05
Obtain BAS for the relevant period
Split the BAS into months and obtain total amounts for each month
Obtain a detailed report of items included in the BAS (transaction report)
Reconcile the transaction report to the BAS and ensure it reconciles
Review the transaction report and ensure treatment of individual transactions correct
Review P&L and check items of income and negative expenses and classification
Reconcile the P&L with items in the BAS
Review and analyse the treatment of difficult items that are relevant to your business
Scrutinise the logic behind the projected GST turnover
Ensure that projections are in accordance with the rules in GSTR 2001/7
Check actual calculations after month end
If actual results are materially different, consider whether this creates ‘overpayment debt’ risk
25Pitcher Partners is an association of independent firms.
Questions
Please submit your questions through the Question function in this webinar and our team will answer them as part of a FAQ document, which will be
sent to you with the recording and slides post webinar
Pitcher Partners is an association of independent firms. 26
Contact us Craig
Whatman
Partner
+61 3 8610 5617
craig.whatman@
pitcher.com.au
Peter
Quattrocchi
Client Director
+61 3 8612 9255
peter.quattrocchi@
pitcher.com.au
Elisha
Herbert
Senior Manager
+61 3 8612 9220
elisha.herbert@
pitcher.com.au
27Pitcher Partners is an association of independent firms.
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