ATO and DESE confirm new JobKeeper Eligibility ruling for ECEC sector

The ATO has confirmed that any payments received via the ECEC Relief Package or Exceptional Circumstances Supplementary Scheme will not be considered a taxable supply and as a result will not need to be included in the JobKeeper “decline in revenue” test calculation needed to determine eligibility. 

This important development comes in the wake of advocacy work from the Early Learning and Care Council of Australia (ELACCA) and the Australian Childcare Alliance (ACA) who received direct notification from the ATO of the ruling change last week with the breakthrough covered here by The Sector. 

An email distributed to the ECEC sector from the Department of Education, Skills and Employment (DESE) confirmed that “The ATO ruling means that any ECEC Relief Package or Exceptional Circumstances Supplementary Payments made to a provider will not be considered as taxable supply, which means the payments have been made exempt from GST.”

“As a result JobKeeper should now be more easily accessible for those providers receiving the ECEC Relief Package payments or Exceptional Circumstances Supplementary Payment provided they do not have access to other income streams” the email read. 

From a JobKeeper application perspective the basic application will not change for providers to determine their eligibility, however now when calculating their decline in revenue test, the provider does not need to include any payments from the ECEC Relief Package or Exceptional Circumstances Supplementary Payments. 

Given that all providers have seen their revenues replaced by the ECEC Relief package in April 2020 as the CCS system was suspended, this essentially means that all providers now will have an income of zero, and therefore when comparing to April 2019 to calculate their decline in revenue, they will automatically qualify for the 15 per cent or 30 per cent reduction tests. 

Commenting on the ruling last week CEO of ELACCA Elizabeth Death said “Whilst the ECEC Relief Package was developed in lock step with the JobKeeper payment package, due to the diversity of business models some providers were unable to gain access to JobKeeper” and that “the response from the ATO should now enable more than 95 per cent of providers across Australia” to be eligible.  

The ATO website has yet to be updated, but applicants for JobKeeper can continue to apply based on the advice from DESE which can be found here.

To read The Sector’s original coverage which contains a more detailed explainer of the ruling please click here.