Australian businesses and their workers who benefited from the federal governments JobKeeper wage subsidy will now have to navigate what it all means at tax time.

On top of this, many individuals who withdrew their superannuation during the covid-19 pandemic to support themselves financially might also be unsure of their requirements at tax time too.

To start off it is important to be aware that your eligibility and claims processing will have changed this year, if you worked from home between 1st July 2020 and 30th June this year as a result of the pandemic.

Just as a refresher, the JobKeeper subsidy was a payment made to eligible businesses affected by the Covid-19 pandemic to support their company in retaining employees. Until the program concluded on 28th March 2021, the subsidy took on many forms as it pushed to include more and more potential employees that were impacted by the pandemic. In its original form, eligible businesses received $1,500 per fortnight per eligible employee to support the people in their company that were employed as of 1st March 2020.

Where an employee’s total wage was less than $1,500 per fortnight before tax, or had been stood down, the employer was required to provide the employee at least $1,500 per fortnight before tax. Where an employee earned more than $1,500 per fortnight, employers used the payment to subsidise the employee’s wages. Self-employed individuals were also eligible to receive the JobKeeper payment.

There is a lot of confusion about whether you need to pay tax on the JobKeeper here is some important information about how covid-19 will impact you at tax time if you previously was paid JobKeeper.

Was JobKeeper tax-free?

JobKeeper payments are not tax free. As the payments were deducted under the same legislation that your normal take-home pay packet is. If you’re an employee, you don’t have to do anything different come tax time because your employer should have included your tax in your income statement, either as part of a salary, wage or an allowance.

My employer gave me a large payment before JobKeeper was announced. What does this mean for tax time?

If your employer gave you a stand-out, lump-sum payment to support you through the initial covid-19 period before JobKeeper was introduced, then this should already be included as part of your salary and wages, similarly to the JobKeeper subsidy. As an employee, you shouldn’t have to do anything different with your income statement when it comes to placing your tax return.

I’m a sole trader who was eligible for JobKeeper. Were these payments assessable?

If you are a sole trader who received JobKeeper on behalf of your business, you will need to include the payments as assessable income for the business if you haven’t already paid the relevant tax.

Was I paid superannuation on my JobKeeper payment?

If you were an employee that is paid more than $1,500 per fortnight, the employer’s superannuation obligations to you during this period did not change, and therefore you received the same superannuation contributions.

However, if you were an employee that was having their wages topped up to $1,500 per fortnight by the JobKeeper payment, it was up to the discretion of the employer if they wanted to pay superannuation on any additional wages paid by the JobKeeper payment.

What can I claim from my stint of working from home?

Although most industries have now returned to their face-to-face set-ups, millions of Australians were forced to work from home at some point over the last 12 months.

You can now claim 80 cents per hour for every hour worked over the last financial year. This shortcut method was introduced by the government to make it easier for Aussies to claim from their working-from-home expenses, which includes phone and internet, lighting, heating and depreciation on equipment. This new method is a lot easier to comply with; however, it is critical that you kept a record of your hours, like a diary or a timesheet, to prove your work-from-home status.

If I access my super early, do I need to pay tax?

No. More than 2 million Australians took money out of their retirement savings early under the superannuation Early Release Scheme in 2020. Those people do not have to pay tax on it or declare it in their tax return.

When is the tax deadline? The tax window will open on 1 July and you will have until 31 October to submit your claim.

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800. 

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)

Post Author: Craig Dangar

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