From the outset, it has been emphasised that JobKeeper payments are assessable income. However, some concerns had been raised as to JobKeeper payment status in regard to being statutory income or ordinary income. And if the latter, whether it is ordinary income derived in the ordinary course of carrying on a business.
If so, JobKeeper payments would be included in aggregated turnover as defined in s 328-120, which determines whether an entity qualifies for a range of concessions and other certain measures, which can include accessing the small business income tax concessions, small business CGT concessions, the instant asset write-off, the refundable R&D tax offset, and the base rate entity tax rate.
But now the ATO has confirmed that although JobKeeper payments are ordinary income, they are not derived in the ordinary course of business, and therefore not included in aggregated turnover.
Tracey Dunn, Associate Director of Tax Services at RSM Australia in Perth, says there was some confusion around whether or not JobKeeper payments were ordinary income for the purposes of calculating aggregated turnover. “If JobKeeper payments were included in aggregated turnover, it could’ve had some really serious consequences,” Tracey says. “This is because it would’ve pushed some businesses over the threshold for the small business CGT concessions, the small business income tax concessions, some certain R&D implications.”
RSM Australia was alerted to this issue and raised it with professional bodies last week. “The ATO has been fantastic and updated their guidance,” she says (see table 1, under ‘Do not include these amounts’). “So that now they take the view that JobKeeper is ordinary income and it’s assessable to the employer. But for the purposes of calculating aggregated turnover, so that you can work out your decline in turnover percentage, it’s not included.”
