Recording JobKeeper credit to bank account

We are a small business with no employees entitled to JobKeeper but we are entitled to the JobKeeper payment under a small business/sole trader entitlement. We have received our first payment last week but I am now not sure how to record this in manager.

It is not an income, it’s not an expense, it’s similar to (but not) capital investment from a director ie, not income and subject to those taxes, plus there’s the whole reporting side. Which I’m still trying to decipher in the other thread.

My question for right now is, how do I record this entry into manager and have it filed away correctly so that it’s not misrepresented in any ATO reports?

I’m guessing there’s a new account to be created for this type of payment?

Edit: I did search and there were only two other threads that came up on mobile and neither dealt with entering the JobKeeper payment when it’s not related directly to an employee as I understand it

It is income, you have to pay tax on it like any other income

@Patch is correct. It represents taxable income and should be allocated to an income account named JobKeeper payments.

@tony @patch, thanks guys, I just wasn’t sure what/how/where to enter it.

New income account, jobkeeper payments. done, thanks

Just one more though, tax code: GST or no GST or leave it blank? (ie 10% GST, GST Free, or blank)

JobKeeper payments are not subject to GST.

Thanks @tony, and maybe I am just a little slow, I know it is “just me” (as my wife says, lol), but “not subject to GST” means it is free of GST (“GST Free”) or leave the field blank? I think there is a subtle difference that I have never fully understood.

Check this link for a good explanation - http://www.bookkeepingfairyperth.com.au/is-it-n-t-or-fre-gst-code/

I still don’t understand whether JobKeeper payments are GST FREE or to leave the field blank

I get that the difference here is whether it gets reported on the BAS, and so I guess it doesn’t (because they already know they’ve given it to me)? But I don’t want to guess.

edit: I guess my greatest issue here is I am not sure if “not subject to GST” is pseudonymous with “GST FREE”. I think they are related, but different. Yes I followed the link, and with regards to purchases I mostly get it, even with sales I get it, but this isn’t a sale, or purchase, it is an income and I don’t know whether it should have a entry of GST FREE or no tax entry at all. Should it be reported on the BAS?

as a further edit: I have researched this to no end, I haven’t found an answer on either of the ATO or treasury’s websites, nor on MYOB, flying solo and others.

Yes
The difference is doing so ensures it is reported as GST free sales income in your BAS report via Manager.

In contrast leaving it blank means it is not included in your BAS report

Not subject to GST means it is out of the scope of the Goods & Services Tax Act and therefore is not required to be reported in your BAS.

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The JobKeeper receipt by the employer is not subject to GST (which I interpret as not included on BAS).

It is tax assessable income for employers. So receipt of JobKeeper by the employer must be included as income for income tax purposes.

Employer payments to employees as a result of the JobKeeper initiative are tax deductible for the employer in the same way as wages paid to employees are deductible for the employer.

Payments to the employee will be subject to income tax, in the hands of the employee, in the same way as wages are.

See this quote from PwC website:
https://www.pwc.com.au/important-problems/coronavirus-covid-19/guidance-on-tax-obligations-and-relief-for-businesses-affected-b/jobkeeper-payment.html
Paragraph 7 under heading “Procedures”

“JobKeeper payments are assessable income of the business that receives them. The normal rules for deductibility apply in respect of the amounts the business pays to its employees where those amounts are subsidised by the JobKeeper payment. The JobKeeper payment is not subject to GST.”

GST is payable on taxable supplies. A JobKeeper payment from the ATO does not fit the definition of a supply, see sections below and is therefore out of the scope of the GST legislation.


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TBH, I thought that it shouldn’t be reported anyway, as it’s not “income” from something that we have done/supplied/etc

Actually, that is the best definition I have ever heard for “not subject to GST”, so much so, that I think that will stick in my mind. It is fully relate-able and understandable and … thanks!

Out of scope of the GST” makes perfect sense, whereas (in my mind) “not subject to”, means not subject to “the rate”. Anyway, thanks. That alone really makes a huge difference.

However those last two posts, I think you guys are arguing the same point, but differently (and also arguing different points).

@AJD is saying JobKeeper is not subject to GST but is “tax assessable” (not GST, but TAX in general), and that quote says so:

@tony in your last post I think you are possibly interpreting AJD as saying JobKeeper is subject to GST. hence you’re talking about GST as it is applicable to supplies. But that wasn’t AJD’s point. (unless your last post was purely for my benefit, in which case, “cool!” and thanks again!) I could be wrong, and I’m summarising much for my own understanding rather than critiquing you guys.

But thanks again, it really is much clearer now (as long as what I state below is correct):

  • JobKeeper is an income stream
  • entered via chart of accounts (income)
  • the TAX field is left blank so as to not get recorded on the BAS