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August 02, 2020

Your JobKeeper Tax Time Questions Answered

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James Morris
Your JobKeeper Tax Time Questions Answered

Well COVID-19 has certainly bought on some interesting times. And with tax time upon us, it adds another layer of complexity. So here is what you need to know about JobKeeper at this tax time:

  1. In a partnership, if one partner has claimed JobKeeper as a business recipient, should the JobKeeper income be reported on the partnership tax return or the individual?
    For a partner in a partnership receiving JobKeeper, the payment is made to the entity and unlike employees, there are no requirements for the entity to distribute the JobKeeper payment. This means money can be distributed per normal or stay in the business. As JobKeeper is assessed on the partnered level, it will need to be reported as business income on the partnership tax return.
  2. In the circumstance of someone returning from maternity leave in July, can JobKeeper still be claimed for that employee?
    Following the employer choosing to participate in the JobKeeper payment scheme and the eligible employee agrees to be nominated, an employee may still be eligible even if they are currently on maternity leave. However, payments cannot be backdated and begin from enrolment.
  3. Against the JobKeeper allowance received, can you still claim a deduction on the company tax return for salaries paid? How is this shown on the tax return?
    Employers are able to claim a deduction for salaries paid, including JobKeeper payments. As long as he business has met the required PAYG withholding and reporting obligations (visit the ATO website here for more information). JobKeeper payments are taxable and must be included in tax returns, more information here.
  4. If an employer has provided their employees with a payment summary showing the JobKeeper payment as an allowance separately, is that correct?
    Under current JobKeeper rules, employees who are paid less than $1,500 per fortnight must be paid the top-up to bring their taxable income to at minimum $1,500 for pay days within the JobKeeper fortnight.
    Use the “Other Allowances” field to report a top-up payment with the description “JOBKEEPER-TOPUP”. This must be entered exactly to prevent delays or reimbursement failure.
    Continue to report eligible employees who are paid $1,500 or more per fortnight to the ATO through the Pay Event report.
  5. Are JobKeeper payments received in July to be included in the tax return for the year 2020, and does it make a difference if it’s on a cash or accrual basis?
    For business entities operating or accrual accounting basis, JobKeeper payments for the month of June will be derived in the month that a valid completed business monthly declaration for June is made, this will generally be July or later, and assessable in the 20-21 tax year.
    For a business entity operating on a cash accounting basis, the JobKeeper fortnight payments in the month of June are derived when the entity receives those payments. Payments received in July or later will be assessed in the 20-21 tax year.
  6. What if an employees income has increased in relation to JobKeeper payments?
    As eligibility is determined on a self-assessment basis by entities, a projected decline in turnover is done on a reasonable basis and the calculation method is documented.
    If the entity or adviser finds the original estimated decline of turnover has not eventuated as anticipated, and as long as the entity was honest and reasonable with their initial projection with appropriate records, the entity will not be asked to repay payments.
  7. If a business enrolls in JobKeeper in July, do the payments go back to March or start from the month of enrolment?
    Payments are not backdated, and begin from month of enrolment.

For more general questions and answers on JobKeeper, read our article here.

Want to know more?

As Government stimulus measures are frequently changing, we are continually updating and creating new tools and information for you. To review the latest materials on COVID-19, please click here. This page will be regularly updated, so please check back in from time to time.

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We’re here to support you through the changes. From making the most of the stimulus initiatives, through to managing the risks associated with the impact of the Coronavirus, the Modoras team is here to help you build a resilient business. Make well-informed business decisions; contact us on 1300 888 803 book a catch up with a Modoras professional.

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.

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