The ATO has said that voluntary repayments of JobKeeper do not reduce the amount of JobKeeper a business received and must be included in a business’s assessable income. Businesses may only claim a deduction in respect of voluntary repayments in limited circumstances.
Making voluntary repayments
Eligible 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 from the ATO.
Businesses must contact the ATO before making a voluntary repayment. These repayments:
- are treated differently to other payment types made to the ATO;
- cannot be made through usual ATO payment channels; and
- require a special Payment Reference Number (PRN).
All JobKeeper payments that an eligible business received are 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.
Provided the business treated its original JobKeeper payments correctly as assessable income, if it then acts in good faith and use its best endeavours to determine whether it is entitled to a deduction for the voluntary repayment, the ATO 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.
Businesses that are unable to claim a deduction may still wish to make a voluntary repayment. A voluntary repayment equal to the JobKeeper received less the tax paid on that amount will ensure a tax neutral outcome overall.