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Job Keeper Turnover - Accrual or cash basis

I'm new

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Replies 43

Hi All


In order to calculate our turnover decline, I need ensure my definition of turnover is in-line with the Job Keeper requirements.

The current publications refer to GST legislation as the defining legislation.

For ATO BAS purposes - the small business I work with reports its GST requirements quarterly and on a cash basis.

When assessing the decline in turnover - do we analyse turnover on the same basis as we report to the ATO via our BAS?

ie - cash basis compared to accrual

ie - reporting period - for quarterly reporting - do we assess the Apr-Jun 2020 period against the Apr-June 2019 period to calculate the decline?

 

Thank you in advance!

 

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Replies 37

Hi @adamgw 

 

Comparing quarterly BAS periods in the current year to the respective BAS periods in the previous year as you have described is one way to calculate a fall in turnover.

We have recently updated the information for Eligible Employers for Job Keeper Payments on our website if you need further examples. 

 

Hope this helps, Ari

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Most helpful response

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Replies 37

Hi @adamgw 

 

Comparing quarterly BAS periods in the current year to the respective BAS periods in the previous year as you have described is one way to calculate a fall in turnover.

We have recently updated the information for Eligible Employers for Job Keeper Payments on our website if you need further examples. 

 

Hope this helps, Ari

Newbie

Replies 13

How to calculate a fall in turnover for the first fortnight starting 30 March 2020

 

To work out your fall in turnover, you can compare either:

  • GST turnover for March 2020 with GST turnover for March 2019
  • projected GST turnover for April 2020 with GST turnover for April 2019
  • projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.

How you choose to project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS, though you can do that if it is easier. The turnover calculation is based on GST turnover, but there are some modifications, including disregarding GST grouping (where two or more associated business entities operate as a single GST group). We will provide more information soon about applying the turnover test.

I

 

Working out your GST turnover

Your GST turnover for a period is your total business income (not your profit), minus any:

  • GST included in sales to your customers
  • sales that aren't for payment and aren't taxable
  • sales not connected with an enterprise you run
  • input-taxed sales you make
  • sales not connected with Australia.

Does this mean that it would appear to not be based on cash or payments received – ie calculating GST Turnover would appear to be more on an accruals basis (value of supplies that you have made so wouldn't that usually be at time of raising invoice) rather than a cash basis?

 

A NEW TAX SYSTEM (GOODS AND SERVICES TAX) ACT 1999 - SECT 188.15

Current GST turnover

General

             (1)  Your current GST turnover at a time during a particular month is the sum of the * values of all the supplies that you have made, or are likely to make, during the 12 months ending at the end of that month, other than:

                     (a)  supplies that are * input taxed; or

                     (b)  supplies that are not for * consideration (and are not * taxable supplies under section 72-5); or

                     (c)  supplies that are not made in connection with an * enterprise that you * carry on.

Initiate

Replies 12

Here is a quote of the information the ATO provides: 

 

"You may use an accruals basis of accounting to calculate both the current GST turnover and projected GST turnover as both calculations require you to include sales that you have made or are likely to make without any reference to when you are paid.

However, if you prepare your activity statements on a cash basis, the ATO will allow you to calculate both the current and projected GST turnovers on a cash basis. The basis used must be the same for calculating your projected and current GST turnover.".

 

My understanding of the provided information is that businesses that prepare their activity statements on a cash basis have the option of choosing to calculate their current and projected GST turnovers on either an accrual or cash basis. However, businesses that prepare their activity statements on an accrual basis are limited only to the acrrual option to calculate their current and project GST turnovers. As such, a business that has experienced sufficient reduction in turnover in an accrual basis, and insufficient reduction in turnover in a cash basis, that prepares their activity statemetns on a cash basis should infact be eligible to receive the JobKeeper payments. 

 

It'd be great to know what anyone else thinks about this.

Initiate

Replies 3

Hi Sandesh,

 

Can you provide a link to where you got that quote from?  Reading that, I understand that we can use accrual basis to show revenue loss.  We are in a similar boat where accural basis; we have been wiped out - but cash basis; we still have revenue coming in for next 2 months due to 60 day payment terms with our customers. 

 

Our accountants have advised us that if we do our BAS on cash basis; we have to show revenue loss on cash basis.  Hence, knowing the source of that quote and link will help in going back to our accountants and getting updated advice (or atleast having evidence that our application was made on advice from ATO)

 

Cheers,

 

Initiate

Replies 2

Yeah, same as our accountant. I’m 95% sure we should be good though. Here is the link.
https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Applying-the-turnover-test/?anchor=Basict...
Its in step 3, under cash or accrual basis.

Enthusiast

Replies 1

Hi Sandesh! They have now changed the info for basic test link - look at the changes to the cash basis - it no longer specifies, if you lodge bas on cash basis?!   Cash or accruals basis

The turnover calculation requires you to include sales that you have made, or are likely to make, in the relevant month or quarter. The calculations are based on the time you make the sales.

You may use an accruals basis of accounting to calculate both the current GST turnover and projected GST turnover as both calculations require you to include sales that you have made or are likely to make without any reference to when you are paid.

The ATO will also allow you to calculate both the current and projected GST turnovers on a cash basis. This means you can use the GST attribution rules to calculate your current and projected GST turnover. If you do so, don’t forget to include GST-free sales. Importantly, the basis used must be the same for calculating your projected and current GST turnover.

Typically, current turnover will equal your GST exclusive sales less your input taxed supplies.

Newbie

Replies 0

This is the latest news 1/5/2020 regarding options of how to calculate gst turnover using cash or accrual... personally I think it should just be “sales”
And not particularly require a choice of accrual or Cash , as gst turnover is based on supplies/ sales. But anyway- check this article out
https://www.icb.org.au/news/home/cash-vs-accruals-ato-explains/a/8465

Initiate

Replies 7

I am so glad I finally searched and find the important information. 

I have one more question.

If a cash basis business chose accural basis for GST turnover ( for job keeper purpose) and the business still remains cash basis for reporting BAS quarterly. Then the quarterly GST turnover reported for job keeper  would not match the quarterly BAS. This would be a problem, I kind of think it is going to be as ATO has data matching and this is not going to match. Or ATO understands this as long as we can explain? or We shall we do to make it right? 

Many thanks.

Enthusiast

Replies 6

Hey MayL
When you give them your projected and actual turnover. It will be either cash or accruals for both. They go off these figures to see how you are recovering.

I don't believe they are reconciling these end of month Jobkeeper figures to the BAS.