If you received a pandemic payment in the last 12 months and you’ve got questions about your tax return this year, you’re certainly not alone.
At the height of the pandemic, 3.8 million employees received the JobKeeper wage subsidy, while COVID forced nearly 2 million Australians onto JobSeeker welfare support or some other form of payment, many for the first time.
However, Australians might not know that they’ll have to flag these COVID payments in their tax return this year.
“Both JobKeeper and JobSeeker payments are taxable so if your income (including the payments) is greater than $18,200 you need to file a tax return,” H&R Block tax communications expert Mark Chapman told Yahoo Finance.
The good news is, the Australian Taxation Office (ATO) already has a record of JobKeeper payments you received, so this information should be already pre-filled when you lodge.
“But always check back to your original payslips to ensure the figure on your return is right,” Chapman added.
If you’re self-employed and you received JobKeeper payments as a business participation, the ATO doesn’t pre-fill this information and you’ll have to do it yourself, he said.
If you received any COVID-19 support payments, here’s ATO advice on what this means for your tax return:
Which COVID payments are taxable?
If you received any of these payments, you’ll have to declare them in your tax return:
JobKeeper wage subsidy
$550, $250 and $150 Coronavirus Supplements (paid on top of JobSeeker)
This should all be prefilled by Centrelink when you lodge your tax return.
“These payments will be part of your pre-fill data and may appear separately or as part of your salary and wage income. If you are a sole trader you declare the JobKeeper payments as income,” the ATO stated on its website.
Business owners should also know that the JobMaker Hiring Credit is also taxable, and employers will have to declare this in their tax return.
How do I lodge this in my tax return?
If you're an employee, you don’t need to do anything – your employer will report it to the ATO.
If you’re a sole trader, include JobKeeper payments as follows:
Section: Net income or loss from business
Subsection: Primary production or Non-primary production (as appropriate) – Business income
Label: Assessable government industry payments
If your organisation is a trust or partnership, lodge JobKeeper payments as follows:
Item 5: Business income and expenses
Label E or F (as appropriate): Assessable government industry payments
What’s not taxed?
Some Australians on certain pensions or disability support received $750 and $250 Economic Support payments.
Good news: these one-off cash boosts don’t count as income, and therefore won’t be taxed.
I received state government COVID-19 payments – are these taxable?
According to the ATO, the answer is yes “in most cases”.
“If you received a grant or payment to support your business during COVID-19, it's taxable income and you'll need to declare it in your income tax return,” the ATO website said.
But there is a specific set of payments from the Victorian Government that are exempt from tax. Here’s what they are, and whether it applies to you.
Is my early access super taxable?
If you took advantage of the COVID-19 Early Release of Super scheme that allowed Aussies to make up to two withdrawals of $10,000, good news: you aren’t taxed on this amount, so you don’t have to declare it in your tax return.
Got a question about Tax Time 2021? Email it to firstname.lastname@example.org, and we’ll answer it.