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Tax Audit

JobKeeper and ATO audit

JobKeeper:  ATO audit

Receiving a Jobkeeper payment carries the risk of an audit because the Australian Taxation Office (ATO) is heavily monitoring fraudulent Jobkeeper claims:  records and monthly declaration/information could be subject to in-depth examination.

Care should therefore be taken in lodging applications for Jobkeeper.

Jobkeeper scheme

 

The Jobkeeper scheme is part of the Government’s economic support package for Australian businesses significantly affected by the coronavirus (COVID-19).  The scheme started with the fortnight beginning on 30 March 2020.  It is currently due to end on the week ending 27 September 2020.  However this may be extended.

 

Under Jobkeeper, eligible employers (includes sole traders, not-for-profits, charities, companies and other entities) can apply to receive $1,500 per eligible employee (and eligible business participant) per fortnight.

 

The subsidy reimburses the employer for amounts paid, withheld, contributed or applied as salary, wages, commission, bonus, allowances, super etc (the wage condition) with respect to each eligible employee  or eligible business participant (as the case may be) per fortnight and where such amounts equals to or exceeds $1,500.

Eligibility and compliance  

The principal test for eligibility is generally a 30% decline in turnover.

An employer’s eligibility to participate in the scheme is principally determined by:

  • Qualified entity (employer)
  • Eligible employee or eligible business participant (as nominated)
  • Wage condition
  • Decline in turnover test

The above eligibility criteria or pre-conditions directly involve factual and legal matters which may be susceptible to under or misreporting of income, falsification or over-claiming of expenses, incorrect or false categorisation of employees as independent contractors and vice versa, non-compliance of reporting and disclosure obligations under different laws etc.

Accordingly, the ATO’s focus is to ensure integrity of the scheme and is investigating:

  • Payments to ineligible persons or non-employees
  • Falsification of records or revising of activity statements to meet the fall in turnover test
  • Applying for the scheme despite no evidence of carrying on a business or no assessable income from carrying on a business
  • Employers not passing the full $1,500 amount to eligible employees
  • Multiple eligible business participant claims etc.

ATO audit and other risks

Application and compliance under Jobkeeper carries an inherent risk of an ATO audit, where the records and monthly declaration/information under the scheme supplied by the eligible employer to the ATO could be subject to in-depth examination. This may potentially lead to a determination of ineligibility under the scheme and also unearth other issues causing the exercise of formal powers by the ATO.

Further, the scheme itself provides for disentitlement for contrived schemes and an audit mechanism by imposing pre- and post-payment record keeping requirements on the entity as pre-condition for entitlement to the jobkeeper payment, as well as expressly empowering the Commissioner to require such records to be produced for examination.

Where the jobkeeper payment is determined as paid in excess or the entity disentitled, the scheme provides for its recovery as a tax debt, imposition of general interest charge, and joint and several liability for such amounts on concerned entities in certain circumstances.

Whilst voluntary disclosure and amendment requests at the earliest for an error or honest mistake may mitigate such risks under the scheme, the law does prescribe penalties for false or misleading statements, incorrectly keeping records etc., which in some cases may lead to significant penalty sums and prosecution. Therefore, entities and persons seeking to apply and benefit from the scheme must ensure eligibility and appropriate compliance.

Credentials

Recognition

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