How to plan for your JobSeeker/Keeper tax return

In a week where Prime Minister Scott Morrison made a rare apology to Australians over the ‘robodebt' debacle and Finance Minister Matthias Cormann threatened to repeal JobSeeker payments for those who attended anti-racism protests, it comes as no surprise that your tax return may not be as straightforward as it seems.

That is because this year you have to factor in JobSeeker and JobKeeper payments, as well as redundancy or stand down payments.

The Australian Taxation Office (ATO) this week set guidance for those very issues and warned taxpayers receiving these coronavirus downturn benefits, to be careful when submitting their tax returns.

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What to do if you are on JobKeeper

The good news for those receiving JobKeeper payments, is you don’t have to do much at all.

JobKeeper payments are included in your regular income statement as salary and wages or allowances. These details are provided to the ATO by your employer, or tax agent if you have one.

The information is automatically included into your tax return by the end of July.

For sole traders, life is a little different and if you run your own business you are the one responsible for including the payments as assessable income for the business.

What to do if you received JobSeeker payments?

Don’t be caught out thinking JobSeeker payments aren’t taxed.

They are and they need to be declared. Failure to declare all income received could hold up your tax return, any refund due or it could see the ATO come knocking on your door looking for answers why.

“Leaving out income can slow your return down or result in a bill later so it’s definitely best avoided,” stated the ATO.

What if I accessed my Super?

No need to worry, if you accessed your super early. Under COVID-19 special arrangements, any amounts you’ve withdrawn from super under the early access program are tax-free. In other words, you don’t need to declare them in your tax return.

Other payments

It is indeed an unusual year and the tax department will be busier than normal this year sorting out all manner of different returns.

They will also most likely be inundated all at once.

Interestingly, in 2019 Aussies earning between $48,000 and $90,000 rushed to lodge their tax return early to capitalise on a tax cuts package which gifted them an offset of $1,080.

This year, the rush is likely to be bigger as those who have experienced hardship over the last few months, look to get their hands on their tax refund as soon as possible.

However, those who have faced hardship are still required to declare all payments including payments from an employer for being stood down, those who have been given redundancy payments and those who have received income protection insurance payout, sickness or accident insurance claims, and accrued leave payouts.

The only clear guidance here is for people who were temporarily stood down.

“These payments are also taxable and appear in their income statement and in their return,” the ATO stated.

“If people aren't sure whether these amounts have been included in their income statement, they should check with their employer.”

The treatment of these payments vary. As such the ATO recommends you follow the instructions on the individual line items in the tax return.

Speak to the ATO if you are facing difficulties

If you are having financial problems, the ATO will work with you to discuss relief options.

This applies to employers, employees and sole traders.

Commissioner of Taxation Chris Jordan earlier announced the ATO will work “shoulder to shoulder” with businesses to assist them through this difficult period.

“Support measures could include deferral of some payments, quicker access to GST refunds and options to enter low-interest payment plans for existing or future tax debts,” he said.

The ATO has set up a dedicated webpage to help taxpayers navigate tax time 2020.

This update is not financial advice. This article is general news and information.

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