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?
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.
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?
Maximise your result this tax time. Save on tax. Taking action before 30 June can open up more opportunities for business growth, increased revenue and enhanced profit margins.
IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.