We have already had numerous phone calls from clients regarding ATO audits in the last few weeks in particular related to JobKeeper payments. We think this article may provide some background as to what the ATO is looking for, the how and why.
It isn’t a surprise that the Government scheme distributing cash during a crisis was going to come with equally fast compliance and review measures, particularly when eligibility was self-assessed.
Two major Australian Taxation Office (ATO) initiatives are searching out fraud and schemes designed to take advantage of the Government’s Coronavirus Economic Response Package.
Tip lines, tax returns and STP
The tip line, tax returns, and single touch payroll are just a few of the data sources the ATO is using to identify “inappropriate behaviour.”
The tip line has already delivered its first target with the very public outing in the Australian Financial Review of The Australian Comfort Group, which owns SleepMaker and Dunlop Foams for an alleged scheme to deliberately depress monthly revenue to qualify for up to $11 million in wage subsidies. Internal emails allegedly from an employee who has also lodged a claim under the Fair Work Act against the manufacturer, appear to demonstrate an internal effort to push invoicing to other periods. The Australian Comfort Group have denied any wrong doing.
The ATO has made its targets clear. For JobKeeper, these include ensuring that:
- Entities meet the eligibility requirements in relation to business income
- Entities are claiming for eligible employees
- Eligible business participants are correctly making claims
- Entities are not manipulating their turnover in order to satisfy the decline in turnover test
The ATO has noted they have also received intelligence on a number of schemes circulating, one of which is the withdrawal of money from superannuation and re-contributing it to get a tax deduction.
For the early release of superannuation measure, behaviours attracting ATO attention include:
- Applying when there is no change to your regular salary, wage, or employment information
- Artificially arranging your affairs to meet the eligibility criteria
- Making false statements or fraudulent attempts to meet the eligibility criteria
- Withdrawing and re-contributing super for a tax advantage – this could not only trigger anti-avoidance rules but also result in additional taxes and impact your eligibility for a super co-contribution.
Where individuals have not met the early access measure’s hardship eligibility criteria, the ATO has stated that fines of up to $12,000 will apply for each false and misleading statement made. In addition, where a scheme has been entered into to obtain a tax benefit, such as claiming a tax deduction for recontributing super withdrawn under the early release measures, Part IVA may apply. That is, the ATO is actively looking for individuals who have utilised the early release measures when they didn’t need it, then recontributing all or part of the super for the purpose of claiming a tax deduction.
For the Cash Flow Boost, the ATO is looking for schemes designed to:
- Artificially restructure businesses to gain access to the cash flow boost
- Artificially changing the character of payments to salary or wages to maximise the cash flow boost
- Inflating reported withholding amounts to maximise the cash flow boost
- Resurrecting dormant entities or phoenixing
- Making false statements or fraudulent attempts to create an entitlement.
Have you genuinely made a mistake? The ATO has stated that if you work with them, and the mistake is genuine, they will give you the support you need, without the worry of accruing a debt, repaying money or getting penalised.
If you have any concerns regarding your JobKeeper declarations, please don’t hesitate to call us on 07 5451 1118.