The Federal Government’s JobKeeper Scheme is expected to be a $320 billion dollar boost for the economy. It is available to businesses which have experienced a drop in turnover due to the COVID-19 pandemic. The scheme was intentionally designed to enable charities to participate and benefit from the scheme, with a lower threshold for the decline in turnover than businesses. Schools were also specifically named in the rules as being eligible to participate in the scheme where they had a 30% decline in turnover. The legislation and rules were drafted and approved in a record short time resulting in a number of areas where there is significant uncertainty in relation to the intention and technical application.
Many schools now face the challenge of determining how the rules should be applied, how the key assumptions made in determining eligibility will be judged with hindsight by the regulator, and whether there is a moral question in relation to accessing the scheme.
There is a lot of information on the ATO website about the scheme and we observe there is considerable confusion. The ATO is actively attempting to clarify how they will interpret the rules and subsequent guidance and rulings to assist the sector and reduce some of this confusion. However, we note there are a number of complexities for schools to consider including, turnover test period, treatment of government funding, school fees, discounts provided etc.
The Key Points
- Eligible – Schools have been intentionally included in the JobKeeper scheme and are specifically named in the rules, albeit with a higher turnover decline threshold compared to other charities. So there is a clear expectation that some schools will be eligible to benefit.
- The JobKeeper Scheme represents significant additional funding for schools and therefore eligibility warrants close consideration. Every school should assess and document their eligibility and report to their governance body.
- Decline in turnover – The JobKeeper Scheme requires a 30% decline in turnover for schools and determining how this should be calculated and for which period requires knowledge of the JobKeeper legislation and rules, the GST Act, and other ATO guidance and rulings. For most organisations this will require specialist tax knowledge and most likely external advice.
- Documentation – One of the eligibility conditions of the scheme is that proper documentation is maintained in relation to an organisation’s assessment. Schools should document their eligibility and all other relevant information in a form that is able to be approved by the governance body and subjected to scrutiny by the ATO.
- Risks – it will be important as part of the government approval process to consider the various risks associated with participating in the scheme and ensure these risks are adequately managed and/or mitigated.
We have an expert team assisting a number of schools to navigate the complexities of the JobKeeper Scheme. We are assisting schools with the documentation to provide the board and management comfort that you have appropriately assessed your eligibility.
If you are interested, we have developed an initial checklist of information requirements needed to undertake this review.
Please feel free to contact Matt Crouch if you have any questions or would like us to undertake a review of your JobKeeper eligibility.