ATO clarifies GST turnover calculations in latest update to JobKeeper guidance
The ATO has updated its Jobkeeper guidance for businesses with some clarity about GST turnover calculations. Here’s what you need to know.
The tax office has pushed an update to its GST turnover guidance for the JobKeeper wage subsidy package, saying it may now ask businesses to explain why they’re calculating turnover on a cash or accruals basis, rather than requiring firms to stick to their normal method.
The Australian Taxation Office (ATO) updated its JobKeeper guidance at some stage on Wednesday. Previously, businesses that calculate Business Activity Statement (BAS) GST turnover on an accruals basis (based on invoices received), were told they would not be allowed to submit calculations on a cash basis.
But, the ATO has now clarified that, while it expects firms to use their normal method of calculation as a “practical matter”, it will allow either cash or accruals calculations.
“As a practical matter, we expect that you will use the GST accounting method that you normally use,” the ATO said.
“In other words, you may use a cash or accruals approach to determining the value of your sales in the relevant month or quarter.
“If you do this, typically, turnover for the relevant period will equal your GST exclusive sales less your input taxed supplies.”
If a business changes their calculations method now, they may face questions.
“If you normally account for GST on an accruals basis, but seek to calculate on a cash basis (or vice versa), we may seek to understand your circumstances to ensure that the calculation achieves an appropriate reflection of your turnover,” the ATO said.
GST turnover calculated on an accrual basis relates to sales a business has invoiced (but has not necessarily been paid for) over their nominated JobKeeper period, while GST turnover calculated on a cash basis relates to sales that have been paid for over their nominated period.
The calculation a business chooses could significantly influence what their turnover decline looks like, year-on-year, particularly given the at-times arbitrary nature of invoicing and payment times for small businesses.
The changes are just the latest as the ATO and Treasury continue to clarify and amend various aspects of the $130 billion JobKeeper program ahead of payments, which are expected to start to flow next week.
Last Friday, Treasurer Josh Frydenberg issued a range of clarifications and changes to the program in response to criticism.
These included changing the rules to allow workers employed under service entity arrangements to apply for JobKeeper, as well as new guidelines for 16- and 17-year-old JobKeeper recipients.
Minors who are not financially independent are now not eligible for JobKeeper payments, restricting the scheme to minors who are providing for themselves.
However, this change came after many businesses had applied for the payments for young employees, and paid them with the expectation of being reimbursed.
The ATO has clarified that businesses that have already paid 16- and 17-year-old workers $1,500 fortnightly to meet their JobKeeper wage condition will be reimbursed for that fortnight, to prevent firms being left out of pocket.
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