On reflection: Special purpose entities and JobKeeper eligibility, and enrolment extension

The government has issued a further update to the JobKeeper regulations to cover service entities, as opposed to operating entities, in relation to the decline in turnover eligibility test.

As many practitioners will be aware, there are numerous circumstances where a business will use a special purpose entity to employ staff, rather than having them being employed directly by the entity that will actually report any decline in turnover.

The government has now announced that it will provide an alternate decline in turnover test for the eligibility of special purpose service entities that provide employee labour to group members and that would otherwise have not met the basic test for decline in turnover.

“This alternate test will apply where an entity provides the services of its employees to one or more related entities, where those related entities carry on a business deriving revenue from unrelated third parties,” Treasurer Josh Frydenberg said in a media release. “The alternate test will be by reference to the combined GST turnovers of the related entities using the services of the employer entity.”

The government said that around 900,000 businesses expressed interest in the JobKeeper scheme prior to enrolment. Enrolments opened at the start of the week and the government reports that so far more than 400,000 businesses have enrolled, covering around 2.4 million employees.

Note also that the Commissioner has extended the time to enrol for the initial JobKeeper periods, from 30 April 2020 until 31 May 2020. If someone enrols by 31 May they will still be able to claim for the fortnights in April and May, provided they meet all the eligibility requirements for each of those fortnights.

Another clarification issued with the same media release concerned full time students aged 16 and 17. “As noted in the explanatory statement to the existing rules, the benefit of the JobKeeper payment to workers over the age of 16 is justified for those who are financially independent and who require the security provided by participation in the JobKeeper scheme and the maintenance of the working relationship that it affords.”

The government said the rules will provide that full time students who are 17 years old and younger, and who are not financially independent, are not eligible for JobKeeper payments.  “This clarification will apply prospectively, which would mean an eligible employer that has already met the wage condition of paying such an employee $1,500 for a fortnight could be entitled to a JobKeeper payment in arrears for that fortnight.”

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  1. Lakmal
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    The coverage and explanations provided by Tax & Super Australia has been nothing short of wonderful. You really do take the complex and make it understandable. Full credit to all the writers and video presenters. The government/ATO should really use you as the information/education provider to the public.

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