Announcements
We’re in read-only mode while we do some scheduled maintenance to bring you a bigger, better and brighter online community.
You can still search the site to find answers or take a look at our current top 10 questions.

ATO Community

JobKeeper - Cash Basis

Newbie

Views 770

Replies 1

I have a company with a quarterly cash GST accounting method.

Under the Accruals method, its GST turnover has increased by more than 50% in both March-2020 and April-2020.

However under the Cash method, its GST turnover has decreased by just under 30% in March-2020 and substantially more than 30% in April-2020. 

The company has a good pipeline of work and accrual-based sales is not likely to drop off, if anything it will continue its upward momentum. However cash is certainly taking longer to come in during the current economic climate.

I am aware that the ATO allows either accruals or cash accounting to assess employer eligibility, this company would be eligible under the cash method. It just feels wrong claiming JobKeeper with accruals turnover increasing, and the company has sufficient cash reserves.

Just wondering if anyhone else has a similar situation and what you are doing about it.

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Former Community Support

Replies 0

Hi @SeanC 

 

It’s not compulsory for employers to participate in the JobKeeper payments, however if they decide to enrol, they need to nominate all eligible employees, you can’t pick and choose.

 

To receive the JobKeeper payment both the employer and employee need to meet all the eligibility requirements.

 

In regards to the turnover test, you can satisfy the fall in turnover test in two ways:

  • The basic test based on GST turnover
  • The alternative test for a specific circumstances. For example where businesses didn’t exist in the comparison period or where businesses were affected by a natural disaster in the comparison period.

You only need to work this out once – you don't need to retest turnover each month.

 

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.

There are different ways of calculating turnover that may be reasonable in your circumstances.

 

As a practical matter, we expect that you will use the GST accounting method that you normally use. 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 you use GST calculations to determine turnover, don’t forget to include GST-free sales.

 

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.

 

If you aren’t registered for GST, we would expect you to use the same accounting method you use for income tax purposes.

Importantly, whichever basis you use must be used consistently in comparing the month or quarter in 2020 with the comparison month or quarter in 2019.

 

You can see more information on our website:Applying the turnover test if you wish to apply.

 

I hope this information is helpful and you remain well during this time.

 

MariR

 

 

 

1 REPLY 1

Most helpful response

Former Community Support

Replies 0

Hi @SeanC 

 

It’s not compulsory for employers to participate in the JobKeeper payments, however if they decide to enrol, they need to nominate all eligible employees, you can’t pick and choose.

 

To receive the JobKeeper payment both the employer and employee need to meet all the eligibility requirements.

 

In regards to the turnover test, you can satisfy the fall in turnover test in two ways:

  • The basic test based on GST turnover
  • The alternative test for a specific circumstances. For example where businesses didn’t exist in the comparison period or where businesses were affected by a natural disaster in the comparison period.

You only need to work this out once – you don't need to retest turnover each month.

 

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.

There are different ways of calculating turnover that may be reasonable in your circumstances.

 

As a practical matter, we expect that you will use the GST accounting method that you normally use. 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 you use GST calculations to determine turnover, don’t forget to include GST-free sales.

 

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.

 

If you aren’t registered for GST, we would expect you to use the same accounting method you use for income tax purposes.

Importantly, whichever basis you use must be used consistently in comparing the month or quarter in 2020 with the comparison month or quarter in 2019.

 

You can see more information on our website:Applying the turnover test if you wish to apply.

 

I hope this information is helpful and you remain well during this time.

 

MariR