“…while it is all very well to talk of 'turning points', one can surely only recognise such moments in retrospect.”
Kazuo Ishiguro, The Remains of the Day
The JobKeeper subsidy has progressed beyond the rush for eligibility and entered its second phase: compliance. Late last month, the Australian Taxation Office (ATO) released guidance highlighting where the regulator will focus its compliance resources.
Hindsight is a dangerous lens as Treasury discovered last month announcing that the number of employees expected to be covered by the JobKeeper scheme was overstated in the original announcement by approximately 3 million. The overstatement reflects “the level and impact of health restrictions not having been as severe as expected and their imposition not having been maintained for as long as expected at the time,” the Treasury statement says.
At the time of the Treasury estimates, not long after the country went into lockdown, we simply did not know what to expect. The first stimulus measures had been announced and long queues formed in front of Centrelink offices. Supermarket shelves were being stripped of essentials. Alarming daily global updates showed the virus spreading unimpeded in many parts of the world. China demonstrated the need for fast, severe and extended lockdowns to remove the possibility of community transmission. For Australia, there was no appetite to wait and see what might happen as other countries with devastating death rates did. We acted swiftly and we have reaped the benefits of that action with a low death rate, albeit at an economic cost. For many businesses, estimating the potential impact of the pandemic, the expectations were the same - fast, severe and extended. Now, with the JobKeeper scheme entering a compliance phase, we need to go back and point to the facts that supported the estimates declared to the ATO.
The ATO is looking carefully at businesses that appear to have made adjustments to their circumstances to meet the JobKeeper eligibility
requirements where, if those adjustments had not been made, the entity would have been ineligible or had lower JobKeeper payments. Or, where
adjustments have been made to enable another entity or subcontractor to meet the decline in turnover test.
Industries or businesses that have not experienced adverse trading conditions and those that appear to have increased staff numbers are
likely to be looked at closely. In its guidance, the ATO sets out a series of examples that are likely to attract their attention:
If your industry or business has been adversely impacted by the pandemic, regardless of your structure or arrangements, it is unlikely the
ATO will review your situation unless there has been an obvious attempt to increase JobKeeper payments.
To add certainty, the ATO notes that where a service entity that employs staff for a related entity has reduced management fees, either
because the service agreement has been changed to reduce the fee by an amount that is proportional to the reduction in the trading entity’s
external turnover, staff have been stood down, or where the related entities cannot afford to pay the fee, and the industry is
adversely impacted by the pandemic, the ATO will not generally seek to apply compliance resources.
If your structure or the way you have accessed JobKeeper is on the ATO target list, this does not mean that there is a problem.
Eligibility to JobKeeper is generally based on an estimate of the negative impact of the pandemic on an individual business’s turnover. Some
will experience a greater decline than estimated while others will fall short of the required 30%, 50% or 15%. There is no clawback if you
got it wrong as long as you can prove the basis for your eligibility going into the scheme.
For those that, in hindsight, did not meet the decline in turnover test, you need to ensure you have your paperwork ready to prove your
position if the ATO requests it. You will need to show how you calculated the decline in turnover test and how you came to your assessment
of your expected decline, for example, a trend of cancelled orders or trade conditions at that time.
Monthly declarations of your current and projected GST turnover are due within fourteen days of the end of each relevant month.
It’s important to ensure that you have paid eligible JobKeeper staff at least $1,500 during each JobKeeper fortnight. If you pay employees
less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your
employees on a monthly pay cycle, your employees must have received the monthly equivalent of $1,500 per fortnight.
For the first two JobKeeper fortnights (30 March-12 April, 13 April-26 April), employers had an extension until 8 May to make the JobKeeper
payments to eligible employees. For the remaining JobKeeper fortnights, employees will need to receive at least $1,500 by the end of each
JobKeeper fortnight or the monthly equivalent of $1,500 per fortnight. Depending on your pay cycle, this may require some adjustments each
Need help managing your JobKeeper payments and compliance? Give us a call on (03) 5911 7000 to request assistance or send us an email.
In the 2019–20 Budget, the government announced that Single Touch Payroll (STP) would be expanded to include additional information.
Throughout March, the ATO sent letters to directors who are potentially in breach of their obligations to ensure that the company they represent has met its PAYG withholding, superannuation guarantee charge, or GST obligations.
It’s a great headline isn’t it? Spend $100 and get a $120 tax deduction. Days after the Federal Budget announcement that businesses will be able to claim a 120% deduction for expenditure on training and technology costs, we started receiving marketing emails encouraging us to spend now to access the deduction.