On our recent webcast, we were joined by ATO’s Assistant Commissioner of Small Business, Andrew Watson, and small-business tax specialist Debra Anderson to talk about preparing for tax time 2020, considerations for recipients of the COVID-19 stimulus measures, the ATO’s attitude to tax time in a pandemic and much more.
In our partnership, one partner has claimed JobKeeper as an eligible business recipient. Should the JobKeeper income be reported on the partnership tax return or for the individual partner?
For a partner in a partnership receiving JobKeeper as an eligible business participant, the payment is made to the entity (the partnership), and unlike employees, there are no requirements for the entity in relation to the distribution of the JobKeeper payment. The money could be distributed as per normal business practices, or stay in the business. JobKeeper is assessable at the partnership level, not the individual level, and you need to report JobKeeper payments as business income in your partnership tax return.
If someone is returning from maternity cover in July, can the company claim JobKeeper from them (they left for maternity cover last September)?
If the employer chooses to participate in the JobKeeper payment scheme and the individual is an eligible employee (please visit https://www.ato.gov.au/general/jobkeeper-payment/employees/eligible-employees/ to find out more) and agrees to be nominated, the individual must return their employee nomination notice before the employer can make a claim for them. An individual can be an eligible employee even if they’re currently on maternity leave. However, JobKeeper payments cannot be backdated and payments start from enrolment.
Against the JobKeeper allowance we received, can we still claim a deduction in our company tax return for the salaries paid? If so, how do we show it in the tax return?
Employers can claim a deduction for salaries paid (including JobKeeper payments) if you have met the required PAYG withholding and reporting obligations. Find out more at http://www.ato.gov.au/PAYGWdeductions. JobKeeper payments are also taxable and need to be included in tax returns. Please visit https://www.ato.gov.au/Sbsupport for more information on where to report JobKeeper payments.
We have noticed employers have provided their employees with a payment summary showing the JobKeeper payment as an allowance separately, which is not right?
Eligible employees who are ordinarily paid less than $1,500 per fortnight must be paid a “top-up” to bring their taxable gross income to at least $1,500 per fortnight for pay days within the JobKeeper fortnights.
Use the “Other Allowances” field to report a top-up payment and insert the description “JOBKEEPER-TOPUP”. This must be entered exactly to prevent significant delays or reimbursement failure. Your software will report the cumulative year-to-date top-up amount for the JobKeeper payment as per other amounts reported in STP.
Continue to report eligible employees who are paid $1,500 or more per fortnight to us through your Pay Event report. These employees do not need to receive a top-up payment. Continue to pay the employee all earnings and include all entitlements to leave accrual and superannuation as you usually would.
Is JobKeeper received in July to be included in the tax return for the year ended 2020? Does it make any difference whether it’s on a cash basis or accrual basis?
For a business entity operating on an accruals accounting basis, JobKeeper payments for the month of June will be derived in the month in which you provide a valid completed business monthly declaration for June. This will generally be in July (or a later month) and will be assessable in the 20–21 income year.
For a business entity operating on a cash accounting basis, the payments for a JobKeeper fortnight in the month of June are derived when the entity receives those payments. For JobKeeper payments received in July (or later), it will be assessable in the 20–21 income year.
How do we handle a situation when income has increased in relation to JobKeeper payments?
Eligibility for JobKeeper is determined on a self-assessment basis by entities. Entities are required to project the decline in turnover on a reasonable basis and ensure the method they have used to calculate the decline in turnover is documented.
If an entity or their adviser finds that their original estimate of decline in turnover did not turn out to reduce as much as anticipated, generally, as long as the entity was honest and reasonable with their projected turnover reduction and kept appropriate records for the basis of their calculation, the entity would not be asked to repay the JobKeeper payment.
If a business enrols for JobKeeper in July, does the payment from the ATO go back to March or do the payments only start from the month of enrolment?
It starts from the month of enrolment. It is generally not backdated.