Under the first version of the JobKeeper scheme put in place in the earlier stages of the COVID-19 crisis, eligibility to participate was determined by a decline in turnover. However that earlier decline in turnover test was based on “projected GST turnover” — not the actual GST turnover that the latest JobKeeper scheme is to use. This put a perhaps unintended dampener on uptake of the JobKeeper scheme, with the earlier projected decline in turnover test resulting in a witnessed reluctance of some businesses to even apply.
A survey of Tax & Super Australia members in late April to early May indicated that 40% of respondent members said they had at least one eligible business client who would not take up JobKeeper.
Respondents could select multiple reasons why their eligible business clients would not access the scheme. The most common reason was that businesses were worried that if they got their eligibility wrong, they would have to pay back money to the ATO (53%). This was followed by businesses not being confident enough that they could satisfy the turnover test (48%), which at the time was a point of confusion among many in the tax and business community. The third most cited reason for not taking up JobKeeper was that they could not access the finance needed to pay employees before the JobKeeper payments flowed (35%).
TSA tax counsel John Jeffreys said at the time that concerns about eligibility echoed feedback already given by members. “The idea that you might get your decline in turnover test wrong is very scary. These are issues we are clearly putting to the ATO to make sure people don’t feel scared to claim the JobKeeper when they are reasonably entitled to it. If a business can reasonably show they meet the eligibility, including for decline in turnover, then the ATO should take a reasonable view when assessing this.”
Now with the JobKeeper scheme extended and re-invented to an extent, the ATO has taken on board these concerns and has issued guidance (QC 63309) on possible overpayments made under the scheme, and how it will approach certain circumstances that may arise. The guidance comes with examples and scenarios to aid in describing the ATO’s options to manage these outcomes.
“Due to the extraordinary circumstances in the early stages of the JobKeeper program, overpayments may have been made in error as businesses moved quickly to access JobKeeper payments,” the guidance says. “If a JobKeeper overpayment is identified, we may decide the overpayment does not have to be repaid, particularly if there was an honest mistake. This decision is made on the facts and circumstances of each case.”
Factors the ATO says it may consider include that a business:
- relied in good faith on a statement made by an employee in their nomination notice
- fully passed on the benefit of the JobKeeper payment to the relevant employee
- made the mistake earlier in JobKeeper when there was less public guidance.
Of course not all mistakes are honest, and the ATO has a list (that it notes as not being exhaustive) of where a mistake will not be considered to be so. This includes if:
- fraud was perpetrated by either the JobKeeper recipient or another entity
- there has been intentional disregard of the law or recklessness in its application
- the entity nominated employees, business participants, or religious practitioners that it should have known would not satisfy eligibility requirements
- the employer has deliberately not met the wage condition
- the entity has been contacted by the ATO about its claim potentially being ineligible and has not taken reasonable steps to check the eligibility before making claims in the future.
Generally, the ATO says it will not impose administrative penalties for JobKeeper overpayments that were the result of a mistake. However, administrative penalties will apply if there is evidence of deliberate actions to get JobKeeper payments that an entity would not have otherwise been entitled to.
Where an obvious overpayment is identified, the ATO will require a repayment, and says it will write to the taxpayer stating why it considers an overpayment has been made, how much this is estimated to be, and how repayment can be made. “If you can’t pay on time, we can help you. If you’re trying to do the right thing, we’re committed to understanding your situation and helping you if possible,” the ATO states. “If you do not agree with our decision to require repayment, you can object and ask us to reconsider our decision.”