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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
Below are some articles that may interest you:
- JobKeeper 2.0: Changes from September
- Your JobKeeper Questions Answered
- Planning for Post Pandemic Recovery
- $150k Instant Asset Write-Off Extended
- Government Stimulus Package for Business
- JobKeeper Package Update: How to Apply
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.
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