JobKeeper GST turnover test: best practice for large businesses
The ATO has already started to turn its mind to how it will review compliance with the JobKeeper Payment and in particular the decline in turnover calculations.
The ATO released guidance for large public and multinational groups regarding what evidence is required to support the predicted decline in turnover for JobKeeper purposes.
Once the GST turnover test is met it does not have to be reassessed based upon actual turnover. However, it is clear that where actual turnover is not in line with the predicted turnover, the ATO will take a close look at the methodology used for the predication. Specifically, where the actual turnover is higher than the predicted 30% or 50% decline.
Methodology guidance: decline in turnover calculations
For large public and multinational groups the predicted decline will need to be evidenced by best practice approaches. These would need to:
- leverage, where possible, existing corporate governance in line with the ATO Tax Risk Management and Governance Review Guide
- be substantiated with contemporaneous records including supporting work papers and reports detailing the methodology used to calculate projected GST turnover
- provide a reasonable assessment of projected GST turnover based upon at the point in time the calculation was made.
Companies also need to:
- demonstrate that any assessment was prepared by personnel with experience and knowledge of the business and forecasting future business performance and that this was appropriately reviewed
- retain documentation detailing the projections and assumptions and also any explanations of variances between the projected and actual outcomes.
Similarly, small and medium businesses should consider what is an appropriate level of contemporaneous documentation that is required to support their decline in turnover calculations.
How ShineWing Australia can assist
Our team can assist to:
- Review the position that you have adopted on your decline in turnover calculations
- Advise on the documentation required to support your position.