JobKeeper GST rules: Sole traders warned on taxable supply hitch

Sole traders are being warned to ensure they’ve reported a taxable supply to the Australian Taxation Office (ATO) before applying for JobKeeper, amid a spate of business owners having their payments frozen in recent weeks.

Last week, The Guardian revealed the ATO had cut off JobKeeper access to 9,000 businesses in a crackdown on access to the program.

Many of these businesses are recently established sole traders, who were reportedly told they were eligible, despite not having reported a taxable supply before March 12.

Sole traders and GST reporting

Businesses should make sure they’ve lodged a taxable supply with the ATO before making a JobKeeper application, says Lisa Greig, principal of Perigee Advisers.

Basically, businesses must have notified the ATO of a taxable supply (or, in other words, income) before March 12 to be eligible for JobKeeper.

For most businesses, this would typically include a business activity statement (BAS) or last year’s income tax return.

Sole traders typically report GST in business activity statements, often filed on a quarterly or even annual basis.

She says many sole traders have been caught out because they typically file BAS statements less frequently, and those who were established in the last 12 months may not have filed yet.

Under JobKeeper integrity rules touted by the ATO, sole traders that have accessed the program under the alternative test for newly incorporated companies, meaning those that have been operating for less than twelve months, are required to report GST monthly.

Although this only applies to businesses that are filing their JobKeeper applications now.

Grieg advises sole traders to contact the ATO if they’re not reporting GST monthly already and begin doing so before filing their applications.

David McKellar of Allied Business Accountants, however, notes switching to monthly registration won’t fix the problem entirely, because sole traders would have needed to lodge their BAS before March 12.

“The only possibility for those impacted who do not meet the listed criteria is to apply for the commissioner’s discretion to grant further time,” McKellar tells SmartCompany.

The ATO has outlined a number of circumstances where it will grant further time to sole traders if they find themselves caught out by the timing of the program.

“I would recommend anyone applying for the commissioner’s discretion to speak with a registered tax agent relating to their eligibility and the application for discretion,” McKellar says.

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