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JobKeeper and Early Super Crackdowns Are Coming from the ATO

JobKeeper and Early Super Crackdowns Are Coming from the ATO

The Australian Taxation Office (ATO) is cracking down on fraudulent claims for JobKeeper and Early Release of Superannuation (ERS). Businesses have an obligation to take reasonable steps to document their applications. JobKeeper payments are not “free money” and the COVID-19 early release of super scheme only applies to those adversely financially effected.
Over 3,000 ATO officers have been tasked to review existing and incoming applications for all stimulus measures. While they are picking up on some genuine errors, other fraudulent claims can expect criminal action. Consequences for fraud can include financial penalties, prosecution, and imprisonment for the most serious cases.

Individuals who have drawn down on their super using the ERS scheme without having suffered any reduction in their salaries are also on the firing line. Investigators are looking in to whether the early access to super scheme has been exploited by some as a tax dodge, whereby individuals contribute money to their super at a reduced tax rate before withdrawing it.

JobKeeper and Early Super Crackdowns Are Coming with the Australian Taxation Office (ATO)
ATO cracks down on JobKeeper and Early Release of Superannuation Claims

The ERS scheme introduced is to allow Australians access to up to $10,000 of their super in the 2019-2020 financial year and a second $10,000 in the 2020-2021 year. JobKeeper gives eligible workers a fortnightly $1,500 wage subsidy to assist businesses to keep employees in their jobs.

The ATO has received thousands of complaints regarding JobKeeper claims via its hotline. Already they have advised more than 8,000 small business owners that they may have to pay back JobKeeper payments after commencing a compliance checking procedure.

“To date, we have refused more than 6,500 applications for JobKeeper since the program commenced, due to either ineligibility or because we have detected other integrity issues, relating to both entities and employees,” an ATO spokesperson confirmed. “We have seen some COVID-19 early release of super examples where people are doing the wrong thing. In some cases, we have stopped applications and prevented super money from being released.”

EARLY RELEASE OF SUPERANNUATION (ERS) SCHEME

To be eligible to access ERS you need to be a citizen or permanent resident of Australian and New Zealand and demonstrate you have been negatively affected by the COVID-19 economic situation.

Additionally you need to qualify for at least one of the following circumstances:
  • you are unemployed;
  • you are eligible to receive one of the following: JobSeeker Payment | Youth Allowance | Parenting Payment | Special Benefit | Farm Household Allowance;
  • on or after 1 January 2020 you: were made redundant | had your work hours reduced 20% or more | were a sole trader with a turnover reduction of 20% or more

Find the ATO guidelines on ERS here: COVID-19 early release of super (ATO website)

JOBKEEPER SCHEME

The JobKeeper rules upon commencement were clear that to make a claim, a business must have:
  • Adequate written evidence to verify a decline in turnover;
  • The basis for calculating its GST turnover;
  • The application of any of the provided alternative tests; and
  • The projections, methodology and evidence supporting these claims.

So should a business in the fortunate position to not have experienced the level of decline originally predicted at the time of commencing JobKeeper (on the basis of suffering 30%, 40% or sometimes higher than 50% declines in turnover) and only suffer declines of perhaps 20% or less be worried? A business with thorough documentation to evidence that their projections were reasonable at the time they were made should be protected even if their actual decline in turnover is less than expected.

Any entities without comprehensive documentation should be mindful of their record-keeping obligations and consider putting in place a position paper before the ATO starts to ask questions.

Find the ATO guidelines on JobKeeper here: Enrol for the JobKeeper payment (ATO Website)

WHAT NEXT?

In preparing for an ATO review, the theory is fairly straight forward:

Documentation, documentation… documentation!

It is critical that businesses and individuals retain comprehensive evidence supporting the basis of their calculations which lead to them claiming eligibility for JobKeeper or ERS.

If you are unsure of how to proceed or meet your obligations, you should seek the assistance of a tax professional, or contact the ATO directly.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained. We are here to help, contact us today.

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    About the Author

    EnVision Partners
    EnVision Partners
    Tax & Business Specialist
    The Collins English dictionary defines the meaning of ‘envision’ as being to “conceive of a possibility, especially in the future, or foresee”. Our business name reflects our desire to provide our customers with such foresight, something that has not changed since the inception of EnVision Partners in 2002.

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