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Tax treatment of JobKeeper payments and concessions thresholds

October 2020


As it clarifies how JobKeeper payments tax treatment applies, some organisations may now be eligible for a range of concessions due to reduced turnover.

The ATO has clarified an important point in relation to the tax treatment of the JobKeeper payments received by an entity.

While it was relatively clear that JobKeeper payments were assessable for the business entity, clarification was required as to whether the payments were ordinary income, and if so, whether they were derived in the ordinary course of carrying on a business, as this could mean that they were included in the annual turnover of entities, which is relevant for a range of small business concession thresholds.

Not derived in the ordinary course of business

The ATO confirmed that although the JobKeeper payments are ordinary income, they are not derived in the ordinary course of business, and therefore not included in aggregated annual turnover.

This may mean that a number of taxpayers could now be eligible for a range of concessions because their turnover has fallen as a result of COVID-19, without needing to consider whether the JobKeeper payments push them back over a number of thresholds.

For example, clients may now be eligible for a number of small business concessions where their aggregate turnover has dropped below $10m.

How does JobKeeper impact GST?

The ATO has also confirmed that JobKeeper payments are not included in GST turnover as they don't represent consideration for a supply made by the business.

Speak to your accountant

Speak to your accountant about which small business concessions may apply for your business by calling us on 02 9957 4033.

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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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