In this first article in our series on where businesses should be heading to from here, we consider the ATO's focus on JobKeeper eligibility and what the end of the superannuation guarantee amnesty period could mean for your business.
ATO targets JobKeeper eligibility compliance through to Christmas
The JobKeeper scheme is one aspect of the government’s approach to address the economic fallout of COVID-19, but it has attracted some criticism. Reports of workers with normally lower earnings seeing their bank balances rise and businesses manipulating their turnover to access the support, mean the government is keen to ensure the self-assessment of eligibility is tested, and so the ATO has now switched its focus to compliance.
The ATO has tasked 3,000 officers to review and identify ineligible and fraudulent behaviour within the JobKeeper scheme. Compliance activities are expected to run through to Christmas and include the following:
- Data matching – cross-check payments with Services Australia and other government agencies data.
- Verification at the time claims are made – the employer may be questioned directly via phone, letter or SMS. This will usually be in relation to information the ATO does not have. If the responses are not satisfactory, a review or audit may follow.
- Post registration or claim activities – the ATO are looking for confirmation on eligibility questions including turnover. This approach will be tailored to the size/sophistication of the taxpayer. It is unlikely to lead to reviews in other areas such as income tax or GST.
At time of publishing, the ATO has refused more than 6,500 applications, and received more than 4,500 whistle-blower reports. Initial findings have uncovered a small number of falsification of records, claims for ghost employees, and workers claiming from multiple employers.
Businesses have been encouraged to well document their approach to eligibility – the ATO tailored guidelines are available here. Ensuring this is done will put your business in a good position in the event of a JobKeeper compliance review and assist the ATO’s pragmatic approach.
The last chance to take advantage of the Superannuation Guarantee Amnesty
The long-awaited superannuation guarantee (SG) amnesty that passed in March 2020 may have lost its potential momentum and the beneficial outcome for workers, due to both the financial impact and the impacts of COVID-19. We are fast approaching the 7 September 2020 deadline for disclosure with limited penalties, and while submissions have been made to extend this deadline, it remains unchanged.
The SG penalty regime is tough, an employer would be required to pay the SG charge (SGC) consisting of:
- The penalty for not giving eligible employees a choice of super fund.
- The shortfall percentage being applied to all earnings, not just ordinary time earnings.
- Ten per cent interest applied to the shortfall amount up to the time of disclosure (even if you only paid late).
- An administration fee of $20 per employee, per shortfall quarter.
- All of the above being non-deductible.
The amnesty is a carrot and stick approach to encourage disclosure. During the amnesty period, the law allows:
- Waiver of the administration fee.
- Deductibility of the SGC.
- Generally no additional penalty (which could be up to 200 per cent of the SGC).
After the amnesty ends, the Commissioner is legally bound to apply a minimum penalty, which in most cases will be 100 per cent of the SGC. Unlike many other taxes there is no reasonably arguable position, or reasonable care standard, which could reduce the SGC or the penalty.
So while employers may be challenged to afford the disclosure now, it may be far more detrimental to just hope for the best. The good news is that disclosure can be made now and payment plans with the ATO negotiated. Most importantly disclosure now will stop the clock on the 10 per cent mandatory interest, reducing the risk of a double-whammy in the future of higher interest and higher penalties.
If you are concerned with your super or JobKeeper exposure, reach out to one of our team members.
Series: Where to from here?
KPMG's 6-part series on where businesses should be heading to from here.