It has been revealed that billions of dollars’ worth of JobKeeper payments were distributed to businesses that increased their turnover at the peak of the covid-19 pandemic in 2020.

The Australian Government originally announced the $1,500 per fortnight wage subsidy in March 2020 when the economy shut down to combat the spread of the virus.

By the middle of last year over one million businesses and non-for-profits were receiving JobKeeper.

It has recently been revealed that 157,650 businesses or employers increased their turnover between April 2020 and June 2020 when compared to the rates of turnover during those months in 2019.

In just three months, those payments accumulated to $4.6 billion in taxpayer-funded wage subsidies.

Businesses and charities across Australia were eligible for JobKeeper if their turnover had already fallen to certain levels, or if they predicted it would.

However, for more than 365,000 employers, real-world turnover did not actually fall below the thresholds for the April to June period last year.

These organisations amassed close to $12.5 billion dollars in JobKeeper payments during that time.

Most businesses, with turnovers below $1 billion a year, needed to show or predict at least a 30 per cent turnover fall to qualify at the beginning of the scheme.

The turnover threshold was 50 percent for big companies and 15 percent for charities.

Once businesses qualified for JobKeeper including based on a turnover estimate they continued receiving payments until around the end of September when turnover tests changed.

There has been large amounts of criticism coming from the federal opposition party, placing pressure on the federal government ensure some of these payments are repaid.

Federal Labour MP Andrew Leigh has demanded increased transparency around JobKeeper recipients, and is calling for businesses that remained profitable to return the JobKeeper they received.

“They saw the figures in real time, they had the numbers in front of them in a way in which we can only now, a year later, see what was going on. The Morrison government needs to be asking these firms to repay” said Federal Labour MP Andrew Leigh.

One business that remained healthy during the period was Harvey Norman. Sales at its Australian franchises rose by about 30 percent between April and June last year.

Harvey Norman stores and their head office received millions of dollars in JobKeeper during the period of April to June last year.

Earlier this year, Treasurer Josh Frydenberg rejected calls to enforce mandatory JobKeeper paybacks stating that “Companies that have the ability to pay back should do so, but that was never the legislated purpose of the program. The purpose of the JobKeeper program was designed to stem that tide of hundreds of thousands of our fellow Australians lining up outside Centrelink. And it was to end that fear we saw across the community at the height of the pandemic” said Treasurer Josh Frydenberg.

More than three million workers received JobKeeper payments.

All in all, about $90 billion was paid in JobKeeper subsidies over the duration of the scheme.

Tips For Avoiding Confusion Over JobKeeper Payments at Tax Time This Year

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.

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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