RSM Australia

JobKeeper - Will your records sustain an ATO review?

Tax Insights

The ATO have recently updated their ‘Keeping JobKeeper Fair’ guidance and have provided examples of the type of activity they are targeting when reviewing eligibility.

With reports of the ATO issuing 6,500 notices denying JobKeeper to certain businesses, business owners and advisers are strongly advised to review JobKeeper claims to ensure decline in turnover calculations will stand up to ATO scrutiny and claims have been made in respect of eligible employees and business participants.

The updated ATO guidance encourages JobKeeper applicants to review their applications and make voluntary disclosure if they have made any errors or an honest mistake.

Businesses, ACNC registered charities and Not for Profits (NFP) who have applied for the JobKeeper wage subsidy should be on notice that the risk of ATO review of their applications is extremely likely and we anticipate the reviews will be robust and extremely thorough.The updated ATO guidance encourages JobKeeper applicants to review their applications and make voluntary disclosure if they have made any errors or an honest mistake.

Where a decline in turnover has been calculated using projected GST turnover, and there has been a subsequent divergence between projected turnover and actual turnover for the test period, businesses will be required to support their calculations on a reasonable basis.


What is reasonable?

What is reasonable will be dependent on the facts and circumstances of the business, however we are of the view a reasonable expectation will need to be more than just a possibility, and any assumptions relied upon by the business when determining JobKeeper eligibility will also need to be supported by some factual basis including some form of tangible evidence.

Appropriate supporting evidence may include, but is not limited to:

  • Evidence of State and Federal government COVID-19 restrictions impacting directly on the relevant industry.
  • Independent expert industry data.Appropriate supporting ATO evidence includes a number of potential records.
  • Economic reports.
  • Cancellation of customer contracts or orders and inability to fill orders due to COVID-19 restrictions impacting on availability of stock.

According to the updated guidance, the ATO will also be targeting JobKeeper payments to people who do not satisfy the eligibility criteria or who are not employees, along with claims for multiple business participants.

In light of this guidance, we recommend businesses consider undertaking a review of employee nomination forms and the application of JobKeeper codes in their Single Touch Payroll  program (STP).


Eligible business participants (EBP)

Business owners who operate as a sole trader or via a partnership, trust or private company are reminded that JobKeeper can only be claimed for one eligible business participant (EBP), and that EBP must be actively engaged in the business.

Whether or not the EBP is actively engaged will be a question of fact and evidentiary support may be required to demonstrate how the EBP was actively engaged in the business.Where JobKeeper has been claimed in respect of an ineligible EBP or multiple EBPs in the same business, we recommend voluntary disclosure be made with the ATO as a matter of urgency.​

We note, where a partner in a partnership, or shareholder of a company is a trust, the EBP requirements will not be satisfied by nominating a beneficiary of the trustee partner or shareholder, even where the beneficiary is actively engaged in the business carried on by the partnership or company.

An EBP must be an individual partner, individual shareholder or individual beneficiary who is actively engaged in the business carried on by the partnership, company or trust.

Additionally, an EBP must also satisfy the other eligibility criteria and will not be eligible if they have permanent employment (other than short term casual) with another employer.

Where JobKeeper has been claimed in respect of an ineligible EBP or multiple EBPs in the same business, we recommend voluntary disclosure be made with the ATO as a matter of urgency.

Business owners who have not nominated all ‘eligible’ employees, or who have not satisfied the minimum wage condition, may be denied JobKeeper eligibility and could face penalties under the Fair Work Act for breaches of the ‘one-in all-in’ and minimum wage condition requirements. Again, we strongly recommend a review of not only JobKeeper eligibility, but also compliance with the ‘one-in all-in’ rule and the minimum wage requirements.

Businesses, ACNC registered charities or NFPs who have engaged in deliberate conduct with the intent to satisfy the decline in turnover test, will face significant penalties and possible criminal action.

Deliberate conduct may include, but is not limited to:Businesses, ACNC registered charities or NFPs who have engaged in deliberate conduct with the intent to satisfy the decline in turnover test, will face significant penalties and possible criminal action.

  • Restructuring to move the invoicing of customers via a related entity;
  • Deferring or delaying invoicing;
  • Requiring staff to take leave during the test period in order to reduce sales activity, or;
  • Delaying or reducing receipts from related entities in order to satisfy the decline in turnover.

How can RSM help?

If you are not sure if your JobKeeper decline in turnover calculations would stand up to ATO scrutiny, or you require assistance with a review of your JobKeeper eligibility calculations, a review of employee eligibility or a review of your compliance with administrative obligations, please contact your local RSM office today.

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