The legislative instrument, Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020, has now been registered.
The alternative tests will only kick in if an entity cannot satisfy the basic decline in turnover test.
The explanatory statement notes that the alternative tests will only apply to seven circumstances.
These include where an entity commenced business after the relevant comparison period in 2019 or the business did not exist in the relevant comparison period and as a result there was no relevant comparison period in 2019.
It will also cover a circumstance where an entity acquired or disposed of part of their business after the relevant comparison period in 2019, and where an entity has restructured part or all of their business after the relevant comparison period in 2019.
Entities who had an increase in turnover by 50 per cent or more in the 12 months immediately before the applicable turnover test period, or 25 per cent or more in the six months immediately before the applicable turnover test period, or 12.5 per cent or more in the three months immediately before the applicable turnover test period, will also be covered.
The alternative test will also cover entities affected by a drought or other natural disaster in the relevant comparison period in 2019, and entities who have an irregular turnover that is not cyclical, such as what can occur in the building and construction sector.
A sole trader or a small partnership where the sole trader or one of the partners did not work for all or part of the relevant comparison period because they were sick, injured or on leave during the relevant comparison period, and those circumstances affects the turnover of the sole trader or partnership, will also be covered.
Each of the seven circumstances has its own alternative test that is detailed in the legislative instrument.
“The commissioner cannot determine an alternative decline in turnover test in all circumstances,” said the explanatory statement.
“It is only in those circumstances where there is an event or circumstance, be it internal or external to an entity, that is outside the usual business setting for entities of that class which results in the relevant comparison period in 2019 not being appropriate for the purpose of an entity in the class of entities satisfying the decline in turnover test.”
Jotham Lian
24 April 2020
smsfadviser.com
Do you have a question about something you've read in this article? Need more information? Want to book an appointment? Simply let us know below and we'll get back to you ASAP.
