How to Calculate the JobKeeper Alternative Tests

• if you apply the first test, there's a special consideration that if you haven't been trading for a month before Mar 1. You take your February turnover, divide it by the number of days you traded, then multiply it by 29
• the test applies to entities that were not operating any business (ref)
• the test does not apply to an entity that was operating one or more businesses and commenced a new additional business (ref)

(1) An entity applies either of the alternative tests under this section if the entity commenced business before 1 March 2020 but after the relevant comparison period.

(2) The first alternative test is -

(a) if the relevant comparison period is a calendar month, the entity uses the average monthly current GST turnover instead of the entity's current GST turnover in section 8 of the Rules, or

(b) if the relevant comparison period is a quarter, the entity multiplies the average monthly current GST turnover by three and uses that figure instead of the entity's current GST turnover in section 8 of the Rules.

(3) The average monthly current GST turnover is -

(a) if the entity commenced business before 1 February 2020, the entity's current GST turnover for each whole month after the entity commenced business and before 1 March 2020 added together and divided by the number of whole months, or

(b) if the entity started business before 1 March 2020, but on or after 1 February 2020, the entity's current GST turnover before 1 March 2020, divided by the number of days the entity was in business and multiplied by 29.

(4) The second alternative test is -

(a) if the relevant comparison period is a calendar month, the entity divides the 3 months' current GST turnover by 3 and uses that figure instead of the entity's current GST turnover in section 8 of the Rules, or

(b) if the relevant comparison period is a quarter, the entity uses the 3 months' current GST turnover instead of the entity's current GST turnover in section 8 of the Rules.

(5) The second alternative test in subsection (4) is not available if the entity had not commenced business at least 3 months before 1 March 2020.

(6) The 3 months' current GST turnover is the total current GST turnover in the 3 months immediately before 1 March 2020.

(7) For the purposes of subsections (3) and (6), if the entity:

(a) qualified for the ATO's Bushfires 2019–2020 lodgment and payment deferrals, then exclude the calendar months covered by the Bushfires 2019–2020 lodgment and payment deferrals from the calculation, unless those are the only months since the entity commenced the business, or (b) received Drought Help concessions, then exclude the months covered by the Drought Help concessions from the calculation, unless those are the only months since the entity commenced the business.

• if you've had mutiple changes, it considers the most recent one only
• if the most recent one had no full month between then and the period you're comparing to, use the month before
• the rule considers that a change to the business makes comparing prior year periods inappropriate (ref)

Note - the wording for Business Acquisition or Disposal (7) and Business Retructure (8) are almost identical so we've consolidated them into one section. [event] for the purposes of this extract refers to either 'acquisition or disposal' or 'restructure'

(1) An entity applies the alternative test under this section if-

(a) there was an [event] after the relevant comparison period and before the applicable turnover test period, and

(b) the [event] changed the entity's turnover.

(2) The alternative test is-

(a) if the relevant comparison period is a calendar month, the entity uses the current GST turnover from the month immediately after the month in which the [event] occurred instead of the entity's current GST turnover in section 8 of the Rules, or

(b) if the relevant comparison period is a quarter, the entity multiplies the current GST turnover from the month immediately after the month in which the [event] occurred by three and uses that figure instead of the entity's current GST turnover in section 8 of the Rules.

(3) For the purposes of subsection (2), if there is more than one [event] that occurs sequentially after the relevant comparison period and before the applicable turnover test period, then use the whole month immediately after the last [event].

(4) For the purposes of subsection (3), if there is no whole month after the last [event] and before the applicable turnover test period, then use the month immediately before the applicable turnover test period.

(5) For the purposes of subsections (2), (3) and (4), if the entity -

(a) qualified for the ATO's Bushfires 2019–2020 lodgment and payment deferrals, then exclude the months covered by the Bushfires 2019–2020 lodgment and payment deferrals and use the nearest month before or after the [event] as appropriate, unless the months covered by the concession are the only months available, or

(b) received Drought Help concessions, then exclude the months covered by the Drought Help concessions and use the nearest month before or after the [event] as appropriate, unless the months covered by the concession are the only months available.

• There are two legs to this test - the starting point is confirming that the business has grown enough that this alternative test applies to the entity
• our interpretation is that you're comparing consecutive periods for the first leg, cascading down from the 50% test down to the 12.5% test
• the rule recognises that rapidly growing businesses are difficult to compare on the basic test (ref)

(1) An entity applies the alternative test under this section if the entity had an increase in turnover of -

(a) 50% or more in the 12 months immediately before the applicable turnover test period, or

(b) 25% or more in the 6 months immediately before the applicable turnover test period, or

(c) 12.5% or more in the 3 months immediately before the applicable turnover test period.

(2) The alternative test is -

(a) if the relevant comparison period is a calendar month, the entity divides the 3 months' current GST turnover by 3 and uses that figure instead of the entity's current GST turnover in section 8 of the Rules, or

(b) if the relevant comparison period is a quarter, the entity uses the 3 months' current GST turnover instead of the entity's current GST turnover in section 8 of the Rules.

(3) The 3 month's current GST turnover is the total current GST turnover in the 3 months immediately before the applicable turnover test period.

(4) For the purposes of subsection (3), if the entity:

(a) qualified for the ATO's Bushfires 2019–2020 lodgment and payment deferrals, use the 3-month period before the Bushfires 2019–2020 lodgment and payment deferrals commenced to calculate the 3 months' turnover, or

(b) received Drought Help concessions, use the 3 month period before this concession commenced to calculate the 3 months' turnover.

• the rule recognises that drought or other natural disasters make it harder to find an appropriate comparison period (ref)

(1) An entity applies the alternative test under this section if -

(a) the entity conducted business or some of the business in a declared drought zone, or declared natural disaster zone, during the relevant comparison period, and

(b) the drought or natural disaster changed the entity’s turnover.

(2) The alternative test is the entity uses the entity’s current GST turnover for the same period in the year immediately before the declaration for the purposes of the basic test in section 8 of the Rules.

• The qualification for the test looks at what happened in the 12 months immediately before the period you're testing
• This test doesn't apply if your business is naturally cyclical
• For example, entities with regular seasonal variance in their turnover have an appropriate comparison period same time last year, so can use the basic test (ref)

(1) An entity applies the alternative test under this section if -

(a) for the quarters ending in the 12 months immediately before the applicable turnover test period, the entity’s lowest turnover quarter is no more than 50% of the highest turnover quarter, and

(b) the entity’s turnover is not cyclical.

(2) The alternative test is -

(a) if the relevant comparison period is a calendar month, the entity uses the average monthly current GST turnover instead of the entity’s current GST turnover in section 8 of the Rules, or

(b) If the relevant comparison period is a quarter, the entity multiplies the average monthly current GST turnover by three and uses that figure instead of the entity’s current GST turnover in section 8 of the Rules.

(3) The average monthly current GST turnover is the current GST turnover for each whole month in the 12 months immediately before the applicable turnover test period added together and divided by 12.

(4) For the purposes of subsection (3), if the entity -

(a) qualified for the ATO’s Bushfires 2019–2020 lodgment and payment deferrals, then exclude the calendar months covered by the Bushfires 2019–2020 lodgment and payment deferrals from the calculation, or

(b) received Drought Help concessions, then exclude the months covered by the Drought Help concessions from the calculation.

• the test only applies to small partnerships as small partnerships would have more difficulty in compensating for the absence from work of one of the partners, and larger partnerships can expect absences (ref)

(1) An entity applies the alternative test under this section if -

(a) the entity is a sole trader or small partnership that has no employees

(b) the sole trader or at least one of the partners did not work for all or part of the relevant comparison period due to sickness, injury or leave, and

(c) the turnover of the sole trader or partnership was affected by the sole trader or partner not working for all or part of that period.

(2) The alternative test is -

(a) if the relevant comparison period is a calendar month, the entity uses the current GST turnover from the month immediately after the month in which sole trader or partner returned to work instead of the entity’s current GST turnover in section 8 of the Rules, or

(b) if the relevant comparison period is a quarter, the entity multiplies the current GST turnover from the month immediately after the month in which the sole trader or partner returned to work by three and uses that figure instead of the entity’s current GST turnover in section 8 of the Rules.

(3) For the purposes of subsection (2), if the entity:

(a) qualified for the ATO’s Bushfires 2019–2020 lodgment and payment deferrals in the month immediately after the month in which the sickness, injury or leave occurred, then use the month immediately after the last month covered by the Bushfires 2019–2020 lodgment and payment deferrals, or

(b) received Drought Help concessions in the month immediately after the month in which the sickness, injury or leave occurred, then use the month immediately after the last month covered by the Drought Help concessions.