JobKeeper payments and 2020–21 tax returns

The federal government’s JobKeeper payments lasted for nine months of the 2020–21 financial year. Which raises the question: How will they affect your upcoming tax return?

Before we get into the tax implications of the payments, let’s refresh our memories:

• The JobKeeper payments were a wage subsidy for businesses significantly affected by coronavirus (COVID-19).
• From 30 March 2020 eligible employers received a payment of $1,500 a fortnight per eligible employee.
• From 28 September 2020, there were two payment rates; and from 4 January 2021 the rates reduced again.
• Employers were required to pay all eligible employees a minimum of the JobKeeper subsidy amount as wages, minus the PAYG tax withheld at the relevant marginal tax rate.
• All eligible employees received the payment, regardless of how much they had previously been earning and even if they were stood down.
• The JobKeeper payments ended on 31 March 2021; employers received their last payments in April 2021

With tax season due to start on July 1, what bearing will these payments have on your tax return?

Employers

The JobKeeper payments your business received are assessable as business income — and should be declared as income in your business’ tax return.

The amounts paid to your employees, including the JobKeeper wage subsidy, can be claimed as a tax deduction.

The payments are not subject to GST.

Employees

Your employer should have treated your JobKeeper payments the same as a salary or wage.

In other words, they should have withheld PAYG withholding and other amounts ordinarily withheld from your salary or wage (e.g. HECS–HELP repayments, salary-sacrifice payments).

When doing your tax return you won’t have to do anything different as your employer should have included your income and tax in your income statement or PAYG payment summary.

(Your employer submits this statement or summary to the Australian Taxation Office on your behalf.)

Sole traders and other business structures

If you or your business received the JobKeeper payments as a business participant, the payments are assessable as business income — and should be declared as income in your business’ tax return.

This will apply if you’re a sole trader, a partner in a partnership, a working beneficiary of a trust, or a working (non-salaried) director of a company.

Employer super contributions

Employers are legally required to pay at least 9.5% of their employees’ ordinary time earnings into their superannuation accounts — the super guarantee (SG).

If an employee was receiving JobKeeper payments and earning more than $1,500 a fortnight, the employer’s SG obligations did not change.

However, if an employee had their wages topped up to $1,500 a fortnight by the JobKeeper subsidy, the employer could choose whether to pay the employee super on the additional wages.

Missed JobKeeper payments

Did your business miss a JobKeeper payment because you did not complete one or more of the monthly declarations required to claim the payment?

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