Lets talk about the tax impact of COVID stimulus measures.
There were two main stimulus measures which were announced last year, one of which was the “cashflow boost” – that’s if you employ someone including yourself. Certainly it didn’t really matter as long as the business employed someone, then you’re entitled to what they call the “cash flow boost”. Now, that was anywhere between $20,000 up to $100,000, depending on how much pay-as-you-go tax that you withheld from your team members.
The great thing about this measure is there’s no income tax on that amount – It’s not assessable income, which is amazing. So if you’re one of the people who received $100,000 boost and think that they need to put $30,000 aside for tax, you don’t need to.
The second one here is JobKeeper – there is tax on JobKeeper. So the thought process there is you had the expense of wages, you had income to supplement that. And so you net the two off so that there is tax to consider. So the JobKeeper amount does actually count towards your other income for the year.
Quite frankly the JobKeeper essentially, it’s a supplement to your wage bill. Now, if you receive $100, you pay $100, you pay no tax – It’s in and out. But if you receive $100 and then you pay $100, but then because of that, you receive more income on top of that, that’s what is taxed on it.
So it’s a bit confusing when you say JobKeeper is tax but really it’s the outcome of supplementing your wages creates more profit because you have less expenses for the year, essentially.
Learn more about Tax Planning and the 12 things you need to consider to legall reduce your tax bill in 2021 – Visit https://learning.benwalker.com/courses/TaxPlanning2021
Select your desired option below to share a direct link to this page.
Your friends or family will thank you later.