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Restructure + Alternative test + Employee

Newbie

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Replies 1

HI ATO, 

I was in a sole trader entity until mid July '20. Through March onwards I was eligible for JobKeeper under an alternative test for high business growth - as the business participant. We had two casual employees as at March '20 who earn under the superannuation threshold and have not been eligible. In July '20, we changed structure to a PTY LTD company and I am now full time employed. The business is exactly the same other than the COVID-19 impact - ie there was no change/add ons to the business.

 

With JobKeeper 2.0, I believe we will still become eligible - but obviously will not be claiming twice.

My first question (1) = Can I continue to claim on the Sole Trader ABN until Sept '20 or do I need to update to the new PTY LTD ABN immediately - Once Jobkeeper 1.0 ends, I use the new ABN to apply for Jobkeeper 2.0?

Second (2) = To clarify the normal (a) period for comparison is Jul-Sept '19 vs Jul-Sept '20 OR the alternate comparison (b), for the period Jul-Sept '20 vs Apr-Jun '20, as using the alternative test my business has grown by 12.5% in Jan-March '20 vs Oct-Dec '19? 

Thirdly (3) = With two casual employees engaged in the business from March 2020, they are not eligible as they have not been with us long enough to be classified NOR do they earn over the super threshold and are not classified as employees?

 

The three parts together are confusing, but I've tried to research and can't quite feel confident the above questions are all correct, thank you!

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Former Community Support

Replies 0

** This post has been updated as it previously contained some incorrect information **

 

 Hi @Squisher26

 

Responses to your questions as follows :-

 

1) Firstly, we will get to the extension of Jobkeeper. We have some new information about the extension of the Jobkeeper payment that you can look at on our ATO website. Keep in mind that the changes are due to start from 28 September 2020 are still only proposals but will take effect from that date, once legislated. We expect to have more information once it has been legislated, so keep an eye on our website for more updates (eg Jobkeeper timeline of content updates).

 

In light of further consideration of your situation, I need to advise you that if you are operating as a new business entity eg company, after 1 March 2020, then your business, unfortunately, would not be classed as an Eligible employer, under the Jobkeeper guidelines. The first point on this webpage is quoted –

 

On 1 March 2020, you carried on a business in Australia, or were either

  • a not-for-profit organisation that pursued your objectives principally in Australia, or
  • deductible gift recipient (DGR) endorsed either, as a public fund or for a public fund you operated, under the Overseas Aid Gift Deductibility Scheme (DGR item 9.1.1) or for developed country relief (DGR item 9.1.2)“ (italics, bold added)

 

So, in other words, if your company was not in operation as at 1 March 2020, as part of the eligibility requirements for employers (in reference to a particular business entity), then you should not be claiming for Jobkeeper (my apologies if my previous advice caused any confusion). The same principle applies if your company was wanting to claim for eligible business participants (would needed to have a company ABN, carry on that specific business in March 2020, as per Partnerships, trusts, and companies (see section, “Work out if you are an eligible entity”).

 

 

2) The question regarding comparison periods or alternative tests is not relevant, as the real issue is about the eligibility of the new business entity (as mentioned above). 

 

3) Please consider a similar ATO Community thread re: casual employees .The bottom line is that a long term casual employee must have had at least been employed in your business since 2 July 2019 (for at least 12 months as per Eligible employees). So the answer is no, unfortunately these casual employees will not be eligible (and the business must pass the eligibility guidelines as well).

 

Please note that this is a community forum, and advice is general in nature only.

 

1 REPLY 1

Most helpful response

Former Community Support

Replies 0

** This post has been updated as it previously contained some incorrect information **

 

 Hi @Squisher26

 

Responses to your questions as follows :-

 

1) Firstly, we will get to the extension of Jobkeeper. We have some new information about the extension of the Jobkeeper payment that you can look at on our ATO website. Keep in mind that the changes are due to start from 28 September 2020 are still only proposals but will take effect from that date, once legislated. We expect to have more information once it has been legislated, so keep an eye on our website for more updates (eg Jobkeeper timeline of content updates).

 

In light of further consideration of your situation, I need to advise you that if you are operating as a new business entity eg company, after 1 March 2020, then your business, unfortunately, would not be classed as an Eligible employer, under the Jobkeeper guidelines. The first point on this webpage is quoted –

 

On 1 March 2020, you carried on a business in Australia, or were either

  • a not-for-profit organisation that pursued your objectives principally in Australia, or
  • deductible gift recipient (DGR) endorsed either, as a public fund or for a public fund you operated, under the Overseas Aid Gift Deductibility Scheme (DGR item 9.1.1) or for developed country relief (DGR item 9.1.2)“ (italics, bold added)

 

So, in other words, if your company was not in operation as at 1 March 2020, as part of the eligibility requirements for employers (in reference to a particular business entity), then you should not be claiming for Jobkeeper (my apologies if my previous advice caused any confusion). The same principle applies if your company was wanting to claim for eligible business participants (would needed to have a company ABN, carry on that specific business in March 2020, as per Partnerships, trusts, and companies (see section, “Work out if you are an eligible entity”).

 

 

2) The question regarding comparison periods or alternative tests is not relevant, as the real issue is about the eligibility of the new business entity (as mentioned above). 

 

3) Please consider a similar ATO Community thread re: casual employees .The bottom line is that a long term casual employee must have had at least been employed in your business since 2 July 2019 (for at least 12 months as per Eligible employees). So the answer is no, unfortunately these casual employees will not be eligible (and the business must pass the eligibility guidelines as well).

 

Please note that this is a community forum, and advice is general in nature only.