Suitable for: Sole traders who had received JobKeeper payments in FY2021
Tax Difficulty: Easy
Time to Read: 3-4 minutes
Tax Focus: Reporting JobKeeper payments accurately in tax returns
In March and April 2020, the Federal Government introduced numerous programs to help Australians cope financially with the impact of the COVID-19 pandemic. One of which was the JobKeeper payment scheme, which aimed to ensure individual Australians have money to continue paying their bills when things get tough
JobKeeper was designed to keep more Australians employed. There are certain implications that are important to take note of when reporting these payments in your 2021 Income Tax Return.
As a sole trader, is my JobKeeper payment taxable?
Yes. When you complete your 2020-2021 tax return, JobKeeper will form part of your gross business income and will be taxed at your marginal tax rate.
Please note that your JobKeeper payments are not reported in your Business Activity Statements as they are not GST inclusive. As such, the payments are only required to be disclosed in your Tax Return.
How do I ensure that I am claiming an accurate amount?
Given that everyone received variable JobKeeper payments throughout the year, it is important for you to keep track of what you received from the Government. In order for us to prepare your return accurately, you must confirm the actual amounts obtained during the year ended 30 June 2021 by checking your bank account from 1 July 2020 to 30 June 2021 and summing all payments up.
If I have just received Centrelink/JobSeeker payments, do I need to lodge a tax return?
All Australian residents and citizens are required to lodge a tax return, unless they qualify for an exemption (see details here). As JobSeeker (and other Government payments such as Newstart, Youth Allowance, Austudy, the age pension and Carer payments) are classified as taxable payments, they need to be declared in your tax return.
The majority of these payments will automatically flow through from your prefill report when we prepare your tax return. You will likely have had taxes taken out on some of these payments as well. If you are under the tax free threshold for the year and have had tax taken out, then you may get some of this back at the end of the year. However, you would still need to lodge a tax return.
Airtax will endeavour to communicate more about this initiative in due course as further information is made available by the Government. In the meantime, you can find further information via:
Need a new way to do your tax?
Take a look at Airtax - we make tax effortless for everyone. It's free to sign up and you only pay when you lodge. To complete your tax return for just $99, get started here.
This document merely provides a broad outline of the subject and is necessarily general in nature. If you require specific advice, which is tailored to your specific circumstances, please do not hesitate to contact us (fees would apply).