JobKeeper: compliance and repayment
With the JobKeeper program officially coming to a close, the payment that has supported more than 3m workers as its height and around 1m in the most recent quarter has been consigned to history. Although it is gone, it should not be forgotten by businesses that claimed the payments as the ATO has signalled that it will continue to maintain the integrity of the scheme through compliance activities. It has also outlined tax consequences for those businesses that wish to make voluntary repayments of the JobKeeper they have received during the life of the scheme.
As the JobKeeper program comes to a close, businesses should be aware that the ATO will continue to maintain the integrity of the scheme through compliance activities. While a majority of the businesses have legitimately used the JobKeeper to keep their businesses afloat, the ATO does have concerns with some businesses taking advantage inappropriately.
In particular, it is looking at several areas of eligibility to the program including:
the decline in turnover test;
wage conditions for employees;
employees that are not eligible employees or those that have not completed a nomination notice;
claiming for more than one business participant by disguising them as employees; and
claiming for individuals that are not eligible business participants.
In addition to the above, the ATO noted it will also be reviewing businesses that appear to have contrived eligibility for the JobKeeper extension by manipulating their GST turnover to meet the actual decline in turnover tests and those that have claimed the incorrect higher tier rate for the employees/eligible business participants when they were only eligible for the lower tier payment.
Businesses that have made inadvertent errors or honest mistakes are not usually required to repay any overpayments of the JobKeeper provided they contact the ATO regarding the mistake and the business has not retained any benefit (ie the JobKeeper payment was passed onto the employee). Of course, whether or not the business made an honest mistake depends on the circumstances of each case, but a mistake made earlier in the JobKeeper program would be more likely to be considered an honest mistake as there were less public guidance available.
While not an exhaustive list, the ATO considers the following not to be honest mistakes:
where fraud was involved by either the JobKeeper recipient or another entity;
where there has been an intentional disregard of the law or recklessness in its application;
where the business’ nominated employees, business participants etc should have known it would not satisfy eligibility requirements;
where the business has deliberately not met the wage condition; and
where the business has been contacted by the ATO regarding a potentially ineligible claim and has not taken reasonable steps to check eligibility before making future claims.
In circumstances where a business has not made an honest mistake, the ATO notes that it will be firm in requiring the repayment of JobKeeper overpayments, and in some instances, it will also apply administrative penalties and/or pursue offences for false or misleading statements.
Some businesses may also choose to voluntarily repay a JobKeeper amount, however, it should be noted that voluntary repayments may only be deductible in limited circumstances.
According to the ATO, a deduction may be available if the repayment was made to prevent a reduction in business from negative publicity or to promote the business in the short term. It further notes that provided the business treated the original JobKeeper payments correctly as assessable income, and act in good faith to determine whether they are entitled to the deduction, compliance resources will not generally be applied to confirm if the payment was deductible. If a deduction is claimed for voluntary payment, it must be done within the same income year in which the repayment was made.
Need to contact the ATO?
If you’ve made an inadvertent error or an honest mistake on your JobKeeper application and need to contact the ATO, we can help you navigate through the complex eligibility criteria and get the best outcome. For businesses that want to make a voluntary repayment, we can help you work out whether the repayment will be deductible and what the tax consequences will be.