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JobKeeper - employees in group service company

Newbie

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Hello @ATO 

 

I've been reading up on the JobKeeper rules and would like to understand whether Treasury / the ATO will clarify the JobKeeper eligibility requirements where employees of a group of companies are housed in a single service company that simply recharges its costs to other entities. In other words, the service / employer company is not 'external facing' and thus would not naturally suffer the required decline in revenue (as the decline is in other group companies). This is quite a common scenario as many groups house their employees in a single company for various reasons. In the absence of any clarity from the ATO, would a group need to apply to the ATO and request the ATO to excercise its discretion to apply an alternate, broader test? Surely in the absence thereof, many group companies (and arguably thousands of employers) would miss out on JobKeeper simply because of a commercial structuring arrangement that does not fit squarely into the requirements currently.

 

The same question is also relevant for where a business has two very distinct business lines (within the same company) and its employees' time can be split clearly according to these business lines. Where one business line's turnover reduced by 90% and the other by 10%, the employees who work for the division that has suffered the 90% decline would not, it appears, be eligible under the current rules.

 

Any feedback from the ATO on this important matter would be appreciated, thanks.  

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Enthusiast

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Good news - Treasurer announced rules will be amended for service entities! https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/jobkeeper-update


@MartinK wrote:

Agreed @Estee_F - Treasury would need to amend the Rules I suspect


 

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Enthusiast

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I am also interested to know this.

Devotee

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Where an entity is part of a larger group, this may affect how they apply the fall in turnover test to determine whether they are eligible. If the larger group has, or estimates they will have, an aggregated turnover of more than $1 billion for the income year in which the test period occurs or had an aggregated turnover of more than $1 billion for the previous year, the entity will be required to show a 50% decline in turnover to be eligible to receive JobKeeper payments.

 

Testing the decline in turnover is done on an individual employer entity basis. It only takes into account the turnover of the entity which is the employer, and not other members of a group.

 

You can use the aggregation rules to work out whether you need to add any other business entities' annual turnover to your annual turnover to work out your aggregated turnover. https://www.ato.gov.au/Business/Small-business-entity-concessions/Eligibility/Aggregation/

Newbie

Replies 4

Hi @Biggiesmalls 

Thanks - although my question was not on aggregated turnover. The issue is that the way in which the Rules are currently drawn up does not deal with the service company issue. 

Enthusiast

Replies 3


@MartinK wrote:

Hi @Biggiesmalls 

Thanks - although my question was not on aggregated turnover. The issue is that the way in which the Rules are currently drawn up does not deal with the service company issue. 


Yes - the question is about service entities falling through the cracks of the eligibility tests.

 

I have seen CPA and CA  sent letters to the ATO Commissioner about this issue so hopefully we will receive some clarity soon (i.e. in the next few days!!)

Newbie

Replies 2

Agreed @Estee_F - Treasury would need to amend the Rules I suspect

Most helpful response

Enthusiast

Replies 1

Good news - Treasurer announced rules will be amended for service entities! https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/jobkeeper-update


@MartinK wrote:

Agreed @Estee_F - Treasury would need to amend the Rules I suspect


 

Newbie

Replies 0

Yes thankfully! Hopefully the amended Rules come through soon!