JobKeeper schemers and the ATO’s administrative approach

The ATO has now issued a practical compliance guideline PCG 2020/4 that deals with its compliance focus regarding schemes devised to access or increase JobKeeper payments. The guideline takes aim at contrived and artificial arrangements that technically satisfy the eligibility requirements, but have been implemented for the sole or dominant purpose of accessing a JobKeeper payment.

The PCG spells out several scenarios that the ATO deems possible arrangements that could influence the JobKeeper outcome for entities involved — such as artificially deferring the making of supplies, or bringing supply forward, solely to gain JobKeeper entitlement. Or a parent company of a corporate group manipulates the timing or reduces management fees.

 It says with deciding whether to apply compliance resources, the Commissioner’s considerations will be “the occasions for and result of the scheme”. The PCG does not specify that COVID-19 needs to be the cause of a business’s turnover fall, but rather “external environmental factors beyond its control”.

Compliance efforts will therefore be driven more by the substance of the outcome achieved rather than the type of arrangement entered into. “For the avoidance of doubt, for this Guideline to apply to your circumstances you do not need to show that COVID-19 was the factor beyond the control of the entity (and its related parties) that affected the entity’s external operating environment.”

Should a scheme be evident, the Commissioner will be able to recover any overpayments and will have the power to apply significant penalties plus interest.

Comments may be made below, however Tax & Super Australia is not in a position to answer specific enquiries. Replies may be made by Tax & Super Australia, making general observations about the issue raised. People should ensure that their comments are respectful and professional and should not make adverse comments on specific individuals. Members can of course make use of our Helpline service and receive detailed and technically accurate responses in the timeframe mentioned under terms and conditions.

Website Comments

  1. David Templeman
    Reply

    How does a potentially eligible employee for Jobkeeper check or know that their employer has registered for Jobkeeper?

    I raise this in the context of ensuring that the one in all in rule applies to all employees concerned.

    • Steve Burnham
      Reply

      John Jeffreys (Tax Counsel) replies:

      Hi David

      Every employee is required to nominate themselves to their employer. The employer should give this form to the employee. If the employee has not received such a form to fill in, the employee can assume that the employer has not (yet) applied to be involved with JobKeeper.

  2. John Jeffreys (Tax Counsel)
    Reply

    Hi David

    Every employee is required to nominate themselves to their employer. The employer should give this form to the employee. If the employee has not received such a form to fill in, the employee can assume that the employer has not (yet) applied to be involved with JobKeeper.

    • Duncan Smith
      Reply

      An employer might not meet the criteria eg 30% revenue decline.
      An employer may decide not to be in JobKeeper.

      There are various steps in JobKeeper – the First step being Enrolment (not registration).
      The second step is setting up STP for JobKeeper Reporting.
      An Employer not using STP would report monthly to the ATO via the Business Portal or if using an Agent ATO Online.

      An employee is not involved in the above steps and does not know whether the Employer receives JobKeeper.

      Will a PaySlip be required to show if the employee is paid under JobKeeper?
      Will the Annual Payment Summary require mention of JobKeeper?

      John mentions the JobKeeper Employee Nomination Notice that is completed by both Employer and Employee.
      This Notice is to be kept for 5 years by the Employer.
      I would suggest Employers keep immaculate JobKeeper Records in case of ATO Enquiry/Review/Audit.
      It will be interested to see how long it will take the ATO to contact employers which may be of concern.
      One does hope this happens in the following months (not years).
      The longer it takes for the ATO to contact an employer the less likely the money will be recovered.

      Duncan Smith

    • Alison Doyle
      Reply

      Hi John, a seperate questions regarding Cashflow Boost.
      1. I have a client that was paying her employee but not withholding tax as the amount was less than $300 each week. She didn’t register for PAYGW as she thought she didn’t have to withhold. She wasn’t using STP either. Bank records show each week wages being paid. I rang ATO to register her for PAYGW & then lodged her JM20 BAS. Cashflow boost was not applied so I rang ATO & was told that you had to be registered for PAYGW before 12March 2020 to get Cashflow boost. You can’t backdate it even if you were paying wages before that date. It doesn’t mention this anywhere in the legislation. In the real world some clients who have little to do with their own bookkeeping will put on a new employee & the first we know about it is when we do the BAS so it is common to have to enrol & backdate PaygW.
      2. I’m also unsure how Cashflow Boost applies to Directors fees. With the changes from 1 July 2019 for the tax deductibility of payments of Director’s fees, if a client hasn’t enrolled in PAYWG but has regularly taken a weekly amount out as ‘directors fees’ should I be backdating these as ‘wages’? In the ATO “Removing tax deductibility of non-compliant payments’ it specifically mentions directors fees and under the section ‘correcting a mistake’ it states ‘you can make your voluntary disclosure by reporting the amount to us via your activity statement or STP’. But again the ATO opinion on this is that because they didn’t register for PAYGW before 12 March they are not eligible for cashflow boost.
      I can’t find anything in the ATO online eligibility guidelines or in the actual Cashflow Boost that mentions the requirement to be registered for PAYGW before 12 March 2020.
      Can you please offer some guidance on this?

      • Steve Burnham
        Reply

        Richard Wilkins replies: There is no requirement for the entity to have been registered for PAYGW by 12 March 2020 (rather they must have an ABN as at that date). If the ATO is not applying the cash flow boost on lodgment of the March BAS, the objection pathway should be considered as per section 12 of the Cash Flow Boost Bill.

  3. LISA CALLENDER
    Reply

    Hello John, may I please ask 2 questions.

    Sole Trader, Business Income has dropped 30%. Works one shift per week at a hospital to supplement their Business Income. Has no “registered” employees @ 1 March 2020 but had agreed to employ a person Part-time starting early May to cover for when the sole trader works the hospital shift, they were just waiting for the person to finish up at their current employer .
    1. Is the sole trader entitled to apply for JobKeeper Allowance for the employee once they begin to pay Wages in May
    2. Is the sole trader entitled to apply for JobKeeper Allowance for themself as they only work one shift each week and is not receiving JobKeeper Allowance from the hospital

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