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.
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