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Partnership Job Keeper + Job Seeker

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Newbie

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My wife and I are engaged in a business partnership. The business is eligible for Job Keeper payments and we have nominated myself to recieve them.

When we first lost a lot of work (before Job Keeper had been passed as legislation) we applied for Job Seeker and both were approved. Later we applied for Job Keeper.

I understand and have confirmed with the ATO that even though I am the one who receives the $1,500 a fortnight, it is business income for tax purposes and needs to be reported through our partnership (which is a %50-%50 share of profit and loss).

My question to the community is, what does this mean for our Centerlink Job Seeker payment? Since we are self-employed, centerlink requires us to report the Job Keeper payment by uploading profit and loss forms every three months, and enterting $0 on the app when reporting each fortnight. Essentially showing that we both earn $750 extra each per fortnight (because the $1,500 I recieve from Job Keeper is business income, which is then split between us). Is anyone in this exact position and can share their experience? Thanks.
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Dynamo

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Although your partnership income is usually 50 /50, if the JK is specifically for you perhaps you should allocate it to yourself only. You may need to amend the partnership agreement to say that any government subsidy applied for in your name will be paid solely to you. Also I thought you could not receive both JK and JS? As you get JK hopefully your wife can still get JS
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Dynamo

Replies 9

Although your partnership income is usually 50 /50, if the JK is specifically for you perhaps you should allocate it to yourself only. You may need to amend the partnership agreement to say that any government subsidy applied for in your name will be paid solely to you. Also I thought you could not receive both JK and JS? As you get JK hopefully your wife can still get JS
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Newbie

Replies 8

Thanks for your reply Alicia! On the phone the ATO service officer first double checked with a technical expert while I was on hold and then told me that I had to report Job Keeper as business earnings through the partnership, distributing it like normal income. That's odd. I will call again on Monday.. to triple check.

That is what I thought but Centerlink website says "If you’re a sole trader or self employed, you must report JobKeeper payment as business income. You’ll have to submit an updated Profit and Loss statement if there’s a change to your overall business profit." Since the ATO service officer told me over the phone that my $1500 needs to be reported as business income, it is reflected on her profit and loss. Which is a bit confusing to me but anyway. What you said makes sense though, I will just call again to see.

Interestingly when I called and asked how do I report the Job Keeper subsidy to ATO for tax purposes if I am the nominated member of a partnership, that question had apparently never been asked before. But the customer service officer double checked and got back to me with the above answer.
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Newbie

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Wow it's so late that I can't even read your name correctly. Sorry haha. Time for bed.

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Initiate

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Hi Aaron,
I hope it's okay but I wanted to ask if you received any further updates on this from the ATO?
We're in literally the exact same situtation as you guys! We are a couple who run a partnership business, both of us on jobseeker but now I am the eligible business participant receiving Jobkeeper.
I rang the ATO three seperate times and each time was told that as the eligible business participant in a partnership, the JK payment is paid to our entity but must be declared on my personal tax return and cannot be shared amoung partners how we normally distrubute our partnership income.
So basically the complete opposite from what you were told! In the end I had to go with this advice as they were so clear on it on the phone.
But I've always doubted it..
So we went forward with a new profit and loss statement to centrelink showing Jobkeeper payment going 100% to me and 0% share to my partner. We originally thought splitting it seemed to make the most sense but the ATO was adamant it was only for me and not allowed to be shared amoung partners. How confusing... haha

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Newbie

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Wow thanks for the reply. That's so strange! My friend who is a tax agent also told me the same advice that you got, but that was before I rang the ATO just to make sure and then got the opposite answer. I will ring them again soon and find out again even though the answer I got was super definite. Very strange. To answer your question I haven't heard anything back from the ATO although I had left my contact details and was expecting a call back last Monday.

 

Incidentally I was talking to my friend who works in the debt department of Centerlink and he said there was nothing wrong with how we were reporting and that it's just 'a good situation.' Although I feel kinda weird about it and am putting all the Job Seeker I receive aside to pay it back later if we have to.

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Newbie

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You would think there would be more people in the same boat and wanting to find out the right thing to do? Haha.

 

I can say though that when I rang up, the lady on the phone said she had not heard that question before (how does the nominated business partner in a partnership report the $3000 a month to the ATO, as business income or some other personal income?) and then she had an expert check it while I stayed on hold for around a quarter of an hour. The answer being that it definitely is business income and needs to be reported through the partnership (with whatever percentage is the normal split).

 

I think that the differences of advice ('definite' advice at that) shows that maybe this particular situation was overlooked or thought about properly? :/

 

If I could ask, when did you call the ATO? I called on Friday 22nd.

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Newbie

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And is it ok to ask how that affected your Job Seeker payments?

 

My wife and I with the 50-50 split are both getting a very small amount + the COVID-19 supplement on top. Which feels really weird for both of us to receive like I said, but the Centerlink website says to report as business income through P&L which we did in line with the instructions we got from the ATO.

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Initiate

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Hi Aaron!
We have so many of the same thoughts on this and it sounds like we've both been researching like crazy only to be sent in circles again and again!


I rang the ATO on the 19th of May, well I actually called three times that day and spoke to three different people haha! So it's a little weird for them to say they haven't had that question before when you called a few days later. I've seen the question asked here on this forum quite a few times and it's always ignored or answered completely differently too... 
I was also chatting to an accountant who runs a facebook group for COVID affected small businesses. She is also really knowledgeable about everything to do with Jobkeeper. We were baffled by this situation for partnerships, as all written information on the ATO site etc pointed to the fact that it could probably be split between partners at tax time (eg: that the entity receives the JK payment). So when I had 3 ATO operators tell me otherwise (that it must be declared on my personal tax return not shared), we were both really shocked. She also spoke to a tax lawyer, who was equally as baffled. The accountant also told me the ATO phone operators are notoriously known for handing out completely wrong information, so take whatever they say with a healthy dose of skepticism. 

Honestly we all came to the conclusion that the ATO doesn't even know what is going on in this scenario. I think it hasn't even been decided how they will be dealing with JK at tax time for partnerships, and are literally making it up on the spot everytime someone calls. It's a really simple but very important question: can the jobkeeper payment be shared between partners like normal business income when it comes to tax returns. I think it's kinda crazy they don't have a clear answer on this. 
The ATO operator I spoke to explained that I can do whatever I want with my payment (eg: give some of it to my partner) but in the eyes of the tax man it is my income to be declared fully on my return.

We've been so stressed about this, because obviously it has huge ramifications when it comes to debt with centrelink. And we can't live off of only one jobkeeper payment as income in our household, we need the other person on jobseeker at least. So we decided to cover our asses by updating our P&L statement with centrelink now showing the business is receiving 1 jobkeeper payment (as you mentioned above centrelink wants to see JK as business income). We supplied a declaration with our profit and loss saying 100% Jobkeeper profit will be paid to me on advice of the ATO (as I am the eligible business participant) - basically any government subsidy applied for in my name will be paid solely to me. So in the eyes of centrelink I am now receiving the jobkeeper partnership profits and my partner is receiving $0. At tax time we will have our accountant also make sure he allocates all the jobkeeper profit to me on my tax return to match this (which technically is what the ATO is saying has to happen anyway but I have my doubts).
If it makes you feel any better, after we deducted our business expenses (losses) on our P&L, I still qualified for $40 of jobseeker as my fortnightly income fell below the $990 cutoff. Which means I am now getting the jobkeeper payment + $40 jobseeker + coronavirus supplement and my partner is still on full jobseeker (minus a little bit due to my JK 'income').
So now I'm getting both even though I tried to do everything correctly? 
It's a huge mess.



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Initiate

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Just as a side note, the main defining factor I had in going with our decision not to split it was: I imagined if we weren't a couple in our partnership business. And in that scenario it would be really weird to have to split the payment. Eg: if I ran a business with my friend, it would be a huge headache if we had to split the jobkeeper ($750 each) and then both go on jobseeker to try to make up the difference. It made more sense that one friend would take the JK and the other friend would have to go on jobseeker.
My hope is that technically if it's paid to the entity and the entity can do whatever they choose to do with it. Which would mean either scenario is right at tax time (splitting it or sending all of it to one person).

If only they had let more that 1 person receive jobkeeper in a partnership they could have saved so many people from this stress.