JobKeeper accounting

The impact on business from COVID-19 has meant that many Australian businesses are receiving JobKeeper payments as part of the Government’s stimulus package. In July and August 2020, the Government announced further extensions of JobKeeper for a further six months until 28 March 2021 with new testing requirements and reduced cash payments.

Businesses receiving JobKeeper payments will need to ensure that the payments are correctly accounted for.

Accounting for JobKeeper — For-profit entities

Payments from the government JobKeeper scheme are considered grants for accounting purposes.

If cash flows from JobKeeper payments have been confirmed by employers and performance obligations are met under AASB 15, the JobKeeper receipt can be accrued in the same period that payroll payment is made in order for employers to recognise a receivable for the grant as each payroll activity is being processed. As such, an accounting entry can be processed as follows:

	Debit ($)	Credit ($)
Cash/other receivable for JobKeeper receipt	XXX
Grant income – government		XXX

Financial reporting presentation for profit entities – JobKeeper grant income

The JobKeeper receipts should be accounted for consistently with existing accounting policies for grant income.

Employers would ordinarily disclose the JobKeeper receipts “gross” in the statement of comprehensive income. The following financial presentation may provide a clear flow of income and related expense in the statement of comprehensive income.

	30 June 2020
Income
Other income –grants	XXX
Expense
Salaries and wages	(XXX)
Net profit/(loss)	–

Accounting for JobKeeper — Not-for-profit entities

The accounting standards appropriate for not-for-profit entities (NFP) eligible for JobKeeper grant payments is AASB 1058 Income of Not-for-Profit Entities. In this instance, the JobKeeper receipts should be recognised as income as to when the salaries are processed and paid to employees. Accounting entries can be processed as follows:

	Debit ($)	Credit ($)
Cash/other receivable for JobKeeper receipt	XXX
Grant income – government		XXX
Salaries	XXX
Cash/accrued wages		XXX

Financial reporting presentation for not-for-profit entities – JobKeeper grant income

The JobKeeper grants should be consistent with existing accounting policies for grant income. As such, a fair presentation of this income in the entity’s financial statements shall be stated as gross amount.

The following financial presentation provides a clear flow of income and related expense in the statement of other comprehensive income.

	30 June 2020
Income
Income – government grants	XXX
Expense
Salaries and wages	(XXX)
Net profit/(loss)	–

Speak to your local Bentleys advisor for further information or assistance with JobKeeper. 

We, at Bentleys, are doing everything we can to help businesses come out of this challenging time in good shape.

We will continue to update our COVID-19 resource hub with important developments, so please return soon.