How Jobkeeper income will be treated for tax this year in your small business!
The Government provided Jobkeeper income (JK) help as a “subsidy” to help pay wages to you as an Employer. This means Jobkeeper is a taxable income subsidy for your business offset by the tax-deductible wages it helps subsidise. Ensure your bookkeeping system has included it as income in your profit and loss as a separate category.
In many cases, small business will break even or make a profit in the 2021 year-end. What does this mean? Many businesses will have a tax bill and, if not planned, may cause some pain when tax return lodgment time
Many clients may have an unexpected tax debt as their business may have started to return to normal, but they were still entitled to jobkeeper when they received it. It appears that the trend so far is many clients broke even or have now fully recovered.
Was Jobkeeper tax-free for your employees
Jobkeeper was an employee subsidy for employers. Therefore, for employees, it’s basically a wage. The only difference they may see is the split on their PAYGW summary. The JK subsidy will be shown as an allowance they need to declare as usual, and any tax was deducted at the time of payment.
As a sole trader, how do I declare Jobkeeper
Jobkeeper needs to be declared as part of your sole trader income, and any expenses claimed as normal. For you effectively as a sole trader, jobkeeper was a subsidy for lack of income and must be declared at tax at your marginal rate.
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