Penalised for being ethical – JobKeeper voluntary repayments

The Commissioner has just thrown a spanner at the brilliant marketing people who think every business should repay their JobKeeper payment as their businesses continued to thrive… Even if you give it back, the Commissioner will tax you on it and may not give you a deduction.

Let that sink in. You get $100k in JobKeeper, discover you did not need it, give it back to the Commissioner and he sends you a bill of $30k (large company) for the tax on the money you gave back to him.

This is certainly why the Commissioner starts his advice on this with the words…

Eligible businesses that received JobKeeper payments do not need to repay those amounts. However, some businesses may choose to voluntarily repay an amount. 

This was your choice to repay, not the Commissioner’s…

He then states the obvious…

All JobKeeper payments that an eligible business received are assessable income.

So, if this is the case, can we get a deduction for the repayment so we don’t end up paying tax on money we don’t have? According to the Commissioner, we only get a deduction for the repayments in limited circumstances and only if the voluntary payment is clearly appropriate to achieve, or directed at achieving, the business objectives of the business.

He gives the following examples of when a deduction may be available: 

  • If the payment is made to prevent reduction in business, or
  • If the payment is made to publicise and promote your business in the short-term.

If you quietly return the money without making a fuss about it… No deduction! 

Now the Commissioner offers two hopes for those who have done this

  1. He states he generally will not apply compliance resources to confirm if the payment is deductible.
  2. He suggests that business in this predicament only make a voluntary repayment equal to the JobKeeper received less the tax paid on that amount will ensure a tax neutral outcome overall.

Talk about encouraging businesses not to return JobKeeper payment!!! So the advice now is only return the after tax amount incase the Commissioner decides you did not get enough good marketing from returning the amounts… Or maybe the advice is just keep it all as the Government will just waste it on some other program if you give it back… Just a thought.


One response to “Penalised for being ethical – JobKeeper voluntary repayments”

  1. Thank you for this wonderful update….I have a client who has put overpaid jobkeeper aside to repay the ATO. The overpayment arose as an employee was entered twice in the Single Touch Payroll records (which the client didn’t want but had to have) and despite numerous hours telephoning the jobkeeper area and telling them this the ATO persisted in paying the “extra” employee for several fortnights! We even managed to fix the STP to reflect the correct numbers of Tier 1 and Tier 2 employees as this is what the ATO need to verify employees for jobkeeper. What happens in 2-3 years time when the employer receives a letter regarding fraudulent claims which they (and I) have spent huge amounts of time trying to prevent?

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