As we all may now know, a small business can access JobKeeper reimbursements from when turnover fall by 30%. Treasury surprisingly proposed that turnover be defined as being GST turnover.
That’s when the confusion started!
All the big accounting firms and research houses were adamant from the start that a small business could assess a fall in turnover on either an accrual basis (when an invoice is raised) or cash basis (when money is received) where a small business reports GST on a cash basis.
The ATO appeared to agree with this. Then they reversed their position by saying that turnover had to be assessed on the basis of the GST registration. This meant cash for the majority of small businesses.
A cynic would say this was done to reduce the number of firms that could receive JobKeeper.
How would that be?
Well cash is a lagging indicator. A very convenient way to ignore reality – reality being that the true measure of a downturn and when it happens is when the value of invoices raised fall.
Thankfully reality has been recognised. Last Monday the ATO officially stated that a small business that reports income on an accruals basis (as in the accounting software and Tax Return reports income when an invoice is raised) could identify a fall of more than 30% in turnover on either a cash or accrual basis. Yes, you get to pick the best result.
We have since re-visited our clients’ positions.
Please contact us if you would like help assessing whether your turnover has fallen enough for you to know qualify. We have read the ATO’s companion paper and are across all other considerations. We welcome your call.
At MRS, we will spend today planning for your success.