Tax-time reminder: Sole traders receiving JobKeeper and JobSeeker must declare payments as assessable income

sole trader

SOLE TRADERS MUST DECLARE JOBKEEPER AND JOBSEEKER PAYMENTS.

The end of the financial year (EOFY) is just around the corner but, with the COVID-19 pandemic on the agenda, this year tax time is going to be a bit more complex.

The Morrison government’s $70 billion JobKeeper program is being accessed by hundreds of thousands of sole traders but, unlike other employers, sole traders using the wage subsidy program will have to deal with some extra tax implications.

That’s because for sole traders, JobKeeper payments count as assessable income, which means they will have to declare the wage subsidy payments on their tax returns.

Neglecting to do this could slow down their return, or generate nasty bills down the track, so it must be declared.

Sole traders receiving JobSeeker payments under the temporary COVID-19 supplement or otherwise, will also need to include this information in their tax returns.

This information should be pre-loaded into the tax return at the ‘Government Payments and Allowances’ question, but early birds might be lodging their statements before this information is ready.

If that is the case, they will have to manually enter that income. Again, neglecting to do so could generate a bill down the line — so they mustn’t forget!

There are also a range of options for sole traders looking for some extra financial flexibility around tax time, including varying PAYG instalments, which allow taxpayers to manage their expected tax liabilities.

Because of the coronavirus outbreak, the ATO is allowing sole traders and other businesses to vary PAYG instalments (including to zero) if they believe paying the current rate will result in them paying too much in instalments, when compared to their estimated tax for the year.

NOW READ: This crisis is different: E-commerce, coronavirus and the looming recession

NOW READ: Manufacturer saves 29 weeks pay after Fair Work Commission slashes workers’ redundancy payouts

You can help us (and help yourself)

Small and medium businesses and startups have never needed credible, independent journalism and information more than now.

That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.

Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.

Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.

Trending