The ATO will be monitoring JobKeeper recipients carefully, to ensure they’re compliant with all the eligibility criteria.
By Jim Vass
For many small business owners and their employees, JobKeeper payments have been heaven-sent. And yes, the legislation was rushed out, leaving a few details a little hazy, and also some potential loopholes, but make no mistake, it has been just what the economy needed to keep small businesses afloat, and people ’employed’ at this time.
But … if you’re receiving JobKeeper payments, you need to be prepared for the possibility of being audited when we come out the other side of Covid-19. The ATO will be monitoring JobKeeper recipients carefully, to ensure they’re compliant with all the eligibility criteria and that they don’t take advantage or rort the system by abusing the JobKeeper payments, or submit bogus claims.
The Federal Government too, has made it clear in a fact sheet that the ATO will be conducting compliance and audit activities to ensure the JobKeeper payment is passed on to employees in the way in which it was intended, including by utilising existing reporting such as Single Touch Payroll (STP).
The JobKeeper payment runs for 6 months to 30 September 2020. With the STP system in place, the ability for the ATO to be able to flag and query possible over or under payments of JobKeeper payments is quite high. What this means is, that any mismatches in JobKeeper payment employee enrolments and STP are likely to be a key driver for audits.
Recipients of other types of Covid-19 short-term financial assistance may also find themselves audited, as a matter of course.
Now, while it’s a common misconception that you’ll only be audited if you’re non-compliant, this is not always the case. And, because ‘audit’ can be very broadly defined as anything from a basic phone enquiry to a complete audit of lodged returns with the ATO, federal, state and territory agencies; which could then extend to the need for engaging relevant specialists such as tax lawyers, if required, it’s suffice to say that being audited can be a proverbial pain in the … well, you know.
For this reason, it is a good idea to consider Audit Insurance, which can cover a range of expenses associated with audits. Audit Shield announced recently that it will indeed now also cover audits initiated in relation to JobKeeper payments.
This is good news. The JobKeeper system isn’t perfect – but it has been a pivotal part of the stimulus package designed to keep the economy afloat, and also hopefully ensure that the ‘kick-start’ of the economy as lockdowns ease is relatively swift and smooth.
No doubt the ATO will find some discrepancies, and these won’t necessarily be malicious. If your business, or you personally, are singled out for an audit, the bottom line is that if you have a professional accountant or tax agent who can demonstrate and justify to the ATO your particular considerations around a specific decisions, then you are in a much better position to successfully get through the audit without too many serious issues.
The ATO wants to catch the cheats and the liars and the fraudsters, not people who have made a genuine mistake. But – just for the record – it has also said that ‘work-from-home’ expenses will also be under scrutiny this year to make sure that all claims are legitimately within the boundaries of the regulations. Home schooling expenses are not tax-deductible.
Calculating and filing tax for the 2020 financial year end may well be complex for many businesses. In the meantime, if you’re receiving JobKeeper for your business, just continue to report as required by the ATO, and start preparing your business for re-opening.
If you have an inquiry about purchasing an Audit Shield policy, or need help adapting your business to Covid-19, please don’t hesitate to contact us.