Taxation of Coronavirus Payments In Your Tax Return

Over the past 9 months, there have been numerous Covid-19 government support payments for business and individuals. A question we are often asked is how these are treated for tax purposes.

JobKeeper payments

JobKeeper payments received by individuals are considered taxable income. Your employer will report them to the ATO along with the tax they withheld. These payments will be part of your Payment Summary which will be available through MyGov.  They 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.

Businesses that received JobKeeper payments to help make up for a fall in turnover, will need to disclose these payments as part of the assessable income of the business for the financial year.  It will be offset by the JobKeeper payments made to staff.

JobSeeker payments and the $550 Coronavirus supplement

Your JobSeeker payment and the $550 Coronavirus supplement are both taxable income and are included in your tax return. The ATO should automatically populate this information for you under the ‘government payments and allowances’ section in your tax return. 

The $750 Economic Support Payment

This payment was made to Australians on lower incomes who were receiving some kind of assistance from Centrelink.  It is exempt from tax and does not count as income. 

Business Cash Flow Boost payments

The federal government cash flow boosts were delivered as credits in the activity statement system to small and medium businesses who employed staff.  They are tax-free payments. You do not need to report or include them in your tax return.

State Government Grants

A government payment to assist a business to continue operating is included in assessable income. This will include assistance provided as a one-off lump sum or a series of payments.  These include:

  • Queensland COVID-19 adaption grant
  • New South Wales Government Small Business COVID-19 Support Grant
  • South Australian Government $10,000 Emergency Cash Grants for Small Businesses
  • South Australian Government Job Accelerator Grant Scheme
  • Victorian Government Business Support Fund
  • Payments under the Northern Territory Government Small Business Survival Fund
  • Northern Territory Government Business Improvement Grant
  • Western Australian Government Small Business grant scheme

Electricity rebates

Some states and territories are offering households and some businesses automatic electricity rebates. These rebates are not included in assessable income. For a business, the rebate will reduce the deduction the business can claim for electricity.

Early release of superannuation

If you accessed part of your super under the COVID-19 early release of super payment, you won’t be required to pay any tax on the payment so you don’t need to disclose it in your tax return.

Still have questions? Feel free to reach out to the team at Activ8 Accountants & Advisors who will be happy to talk further.

Get A Grip On Your Finances

Get A Grip On Your Finances

Even If You’re Financially Secure, It’s Time To Live On A Budget!

As we start to see the loosening of the restrictions imposed due to the COVID-19 pandemic, there is still another big unknown in our lives right now: What is going to happen with the economy? Some would argue that the sharp economic recession brought on by this crisis is near the bottom of the trough and we are close to a recovery stage.  I believe we are virtually guaranteed of an ongoing recession over the next 12 to 24 months.  Particularly after the governments subsidies and stimulus packages come to an end.  What will that mean for our jobs and livelihoods—and what should we be doing financially to prepare?

Some of us are already having to rethink our spending habits to make ends meet. Others may feel more financially secure thanks to high salaries, six-month emergency funds or the ability to work remotely. But when recessions come, they tend to come for everybody—so it is time for all of us to re-evaluate our budgets and, potentially, start saving as much as we can.

Here are three pieces of advice to get you started:

Treat your income like it’s temporary

This is a good mindset to have at any time but particularly now: whatever income you are earning right now is temporary. If you are happy with your current income, don’t take it for granted—and don’t assume there will always be more money coming in.

This mindset becomes even more important during a recession. When jobs are harder to come by it’s important to treat your current income as if it might need to stretch for as long as possible. This doesn’t mean you need to cut back on all discretionary spending, but you might want to consider trimming some of your expenses so that you can put more money into savings or an emergency fund.

Saving money now is worth more than spending money later

In the face of so many unknowns, it is important to err on the side of cash.  In recessions, cash is king.  A lot of retailers have started offering significant sales and discounts to entice shoppers to start spending again—but buying something at a bargain may not be the smartest financial move.

Unfortunately, this advice will not help get the economy ticking over again, but in times of uncertainty, money in your pocket now is worth more than any saving you might make.

In other words: If you spot a great deal, remind yourself that having cash on hand is often more valuable than getting a price cut on a purchase that isn’t absolutely necessary. Saving $50 might still mean spending $100 after all—and you might really need that $100 in the not too distant future.

Make a plan and act

If you’re worried about how long your money might last during a potential recession—or if you’re simply unsure about what you should be doing with your money right now— try budgeting for 30 days, then re-evaluate.

No matter the current condition of your financial safety net. Create a budget, cut your expenses and save every dollar you can for the next 30 days, then evaluate: Did you actually trim as much as you could’ve? Did you make any purchases you regret? Were there any purchases you should have made but didn’t? How did your budget affect your overall quality of life?

Once you know the answers to these questions, you can reconsider and refresh your budget for the next 30 days. Continue to budget, reflect and repeat while saving as much money as possible—because whether you feel financially secure or financially anxious, right now it’s essential to start preparing for an uncertain future.

Don’t cut out all the things that make life bearable in these stressful times.  If you can keep something that just makes you happy, keep it.  For me, it’s chocolate and red wine.  So, if you can afford that nice bottle of red you ordered, go ahead and drink up!

Don’t hesitate to contact us if you’d like some assistance with your personal budgeting.  ASIC’s Moneysmart website also has an excellent budget planner (under Tools & Resources) as well as other useful advice.  Check out:


JobKeeper Update – 10 April 2020

The JobKeeper payment was passed into legislation on 8 April 2020. It is designed to keep more Australians in jobs and support businesses who have been significantly impacted by COVID-19.

In this update, we provide details on:

  • Which businesses are eligible
  • How you can determine your decline in turnover
  • Eligibility for sole traders, partnerships and the self-employed

As well as specific details for:

  • Employee eligibility
  • How to pay JobKeeper to employees
  • Superannuation obligations
  • ATO integrity rules

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