Bonus Article, Voluntarily repaying JobKeeper and the ATO’s approach to tax treatment

The ATO has stated thateligible businesses that received JobKeeper payments do not need to repay those amounts. However, some businesses may choose to voluntarily repay an amount. This amount can be equivalent to some or all the JobKeeper payments received.

The ATO says that voluntary repayments do not reduce the amount of JobKeeper a business received, and these payments must be included in a business’s assessable income.

A voluntary repayment of JobKeeper may be deductible only in limited circumstances and only if the voluntary payment is clearly appropriate to achieve, or directed at achieving, the business objectives of the business.

For example, a deduction may be available if the payment is made to:

  • prevent reduction in business, or
  • publicise and promote your business in the short-term.

The ATO says that provided a business treated its original JobKeeper payments correctly as assessable income, if the business “then acts in good faith and uses its best endeavours to determine whether the business entitled to a deduction for the voluntary repayment, we will generally not apply compliance resources to confirm if the payment is deductible”.

Businesses must claim the voluntary repayment deduction in the same income year in which the repayment was made.

However the ATO also states that businesses that are unable to claim a deduction may still wish to make a voluntary repayment. If so, it says a voluntary repayment equal to the JobKeeper received, less the tax paid on that amount, will ensure a tax neutral outcome overall.