Last updated: 14 May 2020
- Overview of eligibility criteria
- What is an eligible entity
- How to assess a revenue drop - GST turnover
- Alternative method to assess revenue drop - if you've been operating less than 12 months
- What is an eligible business participant
Eligibility criteria for sole traders to access JobKeeper
To be eligible for the JobKeeper payment as a sole trader, you must meet the following criteria:
1. Eligible entity
The eligible entity criteria is the same for businesses with employees and other entities, such as sole traders.
To be an eligible entity, you must satisfy all of the following conditions:
- Have been actively carrying out a sole trading business in Australia on 1 March, 2020
- Satisfy one of the following fall in turnover tests for the relevant period:
- A business with less than $1 billion turnover which has experienced, or expects they will experience, a 30% or more year-on-year drop in income as a result of COVID-19
- Businesses with turnover of more than $1 billion are eligible if they lose, or expect to lose, 50% or more of their income as a result of COVID-1
- Have had an active ABN on 12 March, 2020
- You had lodged, on or before 12 March, 2020, at least one of the following:
- A 2018-2019 income tax return, which included sole trading income.
- A BAS/GST return for any tax period started 1 July, 2018 and ended before 12 March, 2020. This BAS must show that your business earned income (whether that income arises from taxable, GST-free, or input-taxed sales)
- Your business is not an ineligible entity as listed on the ATO website here
How to assess revenue drop (GST turnover)
The way to assess drop in revenue includes:
- GST turnover for March 2020 with GST turnover for March 2019
- Projected GST turnover for April 2020 with GST turnover for April 2019
- Projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.
See instructions for calculating GST turnover and how to make this declaration here.
Started operating less than 12 months ago? Use one of the alternative tests:
You are able to apply either of the alternative tests if you commenced business before 1 March 2020 but after the relevant comparison period (you don't have a year's worth or trading):
The first alternative test is:
- if the relevant comparison period is a calendar month, you can use the average monthly current GST turnover
- if the relevant comparison period is a quarter, you can multiply the average monthly current GST turnover by three and use that figure
So how do you determine the average monthly current GST turnover is? Glad you asked:
- if you commenced business before 1 February 2020, this would be your current GST turnover for each whole month after you commenced business and before 1 March 2020 added together and divided by the number of whole months, or
- if you started business before 1 March 2020, but on or after 1 February 2020, this would be your GST turnover before 1 March 2020, divided by the number of days the entity was in business and multiplied by 29
The second alternative test is:
- if the relevant comparison period is a calendar month, you divide the 3 months’ current GST turnover by 3 and use that figure instead of your current GST turnover or;
- if the relevant comparison period is a quarter, then you can use the 3 months’ current GST turnover instead of your current GST turnover.
However it is important to note that you cannot use the second test if you had not commenced business at least three months before 1 March 2020.
See more information about the alternative tests on the ATO website here.
2. Eligible business participant
Sole traders, without employees, can be eligible for a single $1,500 payment per fortnight for the eligible business participant. This person is a non-employee individual who is actively engaged in the operation of the business.
New criteria which for eligible business participants includes the following:
- They must not be an employee of the entity
- They are actively engaging in the activities of the business for the payment period (ie from 1 Mar 2020)
- They must not be receiving any other government financial support
See the full list of criteria here. Further conditions may need to be met after you have completed enrolment.
Airtax will endeavour to communicate more about this initiative in due course as further information is made available by the government. In the meantime, you can find further information via:
- Fact sheets on the Treasury website
- The ATO’s JobKeeper portal - including new sole trader information
- By booking a free 10 minute tax chat with a PwC tax specialist
This document merely provides a broad outline of the subject and is necessarily general in nature. If you require specific advice, which is tailored to your specific circumstances, please do not hesitate to contact us (fees would apply).