Will I be taxed on JobKeeper?

By Brittany Lazarus |

Making It

Work

JobKeeper wage subsidies have been reduced, but payments have been extended until March 2021. Treasurer Josh Frydenberg earlier this week revealed that from 28 September, the current subsidy will reduce from $1,500 per fortnight to $1,200 per fortnight and $750 for those working less than 20 hours a week.

And from 4 January until 28 March, the top tier will receive $1,000 per fortnight and the bottom $650 per fortnight.

But the big question is will you continue to be taxed?

The short answer is yes.

JobKeeper 2.0 the quick rundown:

  • The second phase of JobKeeper will run from September 28, 2020 until March 21, 2021.
  • From September 28th 2020, eligibility for the JobKeeper Payment will be based on turnover in the relevant period.
  • The new approach will be two-tiered.
  • JobKeeper eligibility will be re-assessed at the end of September and again in early January.
  • The payments are not tax-free and will be taxed as regular income.

The two-tiered approach will be based on hours worked and will be split as follows:

  • The top tier will pay $1,200 a fortnight until January 3, 2021, then dropped to $1,000 a fortnight.
  • The top tier payments are for full time workers who are working more than 20 hours a week.
  • The bottom tier will pay $750 a fortnight until January 3, 2021, then dropped to $650 a fortnight.
  • The bottom tier payments are for part time workers who are working 20 hours or less in a week.
  • The payments will continue to be treated as regular salary or wages for all tax purposes. Employers will withhold income tax along with any other amounts that are usually withheld from wage or salary payments. This might include things like salary sacrifice arrangements or HECS-HELP loan repayments.

You should check your payslip to see the amount you are receiving before income tax etc. if you have any concerns.

If your employer is receiving the JobKeeper payment for you, in most cases you should be receiving an amount equivalent to the appropriate JobKeeker payment before tax in your normal pay run.

If you are a sole-trader receiving JobKeeper on behalf of your business. You will need to include the payments as assessable income for your business.

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