GST Stewardship Group special briefing 25 June 2020

COVID-19

JobKeeper payment scheme

The ATO provided a brief update on the current status of the JobKeeper scheme noting that Treasury is currently undertaking a review of the scheme. This review was flagged when the measure was originally announced.

Approximately 95% of JobKeeper payments are being made within 3–4 days. In situations where payments are held up, the ATO is in contact with applicants.

The focus is currently on eligible business participants and sole traders.

Attention is also being directed towards other issues such as employees on multiple applications.

A lot of information is being provided to the ATO Tip-off hotline, some of it genuine and some of it going to the relationship between the employer and employee, including allegations that JobKeeper money is not being passed on.

Where an honest mistake has been made the ATO will adjust for the future. Information will soon be available publicly on this.

The turnover test is a one-time test and the ATO does not intend to investigate differences unless they fall outside tolerance levels.

Boosting cash flow for employers

The cash flow boost is a government stimulus measure supporting small and medium businesses and not-for-profit organisations.

The cash flow boost is being delivered as credits in the activity statement system and in two tranches.

The initial cash flow boost will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 2020.

If a business received the initial cash flow boost, they will automatically receive an additional cash flow boost when they lodge their activity statements for each monthly or quarterly period from June to September 2020.

The additional amount will be equal to the total amount of the initial cash flow boost credited in either two (for quarterly lodgers) or four (for monthly lodgers) instalments.

The June lodgments may include amounts of the initial cash flow boost as well as the first of the additional cash flow boost.

Our focus has been on crediting the cash flow boost as quickly as possible to assist businesses.

The process for cash flow boost is mostly automatic unless the information the ATO holds does not enable us to confirm that the taxpayer met the eligibility criteria including:

• those who may be eligible but need to provide additional information to meet the eligibility criteria
• those that have been stopped for verification because there is something out-of-pattern, for example, when compared to prior years.

In many of these cases, businesses are providing the evidence required, enabling credits to be processed, however we are also seeing cases where businesses are unable to provide evidence that payments have been made or where there are newly created employment relationships.

Where a business is found to be ineligible, they will be required to repay any cash flow boost amounts that they have been overpaid.

Instant asset write-off and Backing business investment

The instant asset write-off has been extended to 31 December 2020. This means, if eligible, you can claim an immediate deduction for the business portion of an asset first used or installed ready for use from 12 March 2020 to 31 December 2020.

For backing business investment, from 12 March 2020 until 30 June 2021, businesses can deduct the cost of eligible depreciating assets at an accelerated rate.

For both measures, an entity’s aggregated turnover must be less than $500 million.

Early release of superannuation

Eligible individual taxpayers can access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21.

Eligible temporary residents can apply to access up to $10,000 of super in 2019–20. Temporary residents cannot apply after 30 June 2020.

The principal focus for the ATO is to make sure that money gets to individuals as soon as possible.

The applications are self-assessed. The ATO is conscious that applicants’ circumstances can change. We know genuine mistakes can be made and encourage people to contact us to have a discussion where we will work with them to remedy their position.

Information has recently been updated on the ATO’s website to incorporate information about our approach to integrity.

JobKeeper compliance program

The ATO issued a media release outlining our approach to fraud and schemes designed to take advantage of the government’s COVID-19 stimulus package - ATO zeroes in on COVID-19 fraud.

We are seeking to distribute messages about our compliance approaches including leveraging our relationship with our Stewardship groups.

We are using sophisticated data and behavioural models to review applications and identify trends.

A focus is on the eligibility of employers and employees.

Behaviours we have seen range from genuine errors to fraudulent behaviour.

Some errors relate to Single Touch Payroll reporting not being up to date – examples include the addition of new employees, use of the tax file number exemption code and incorrect employee details. Other mistakes include applications being made under the wrong Australian business number (ABN) e.g. using trustee ABN instead of the trust ABN.

Other behaviours identified include:

• organisations holding an ABN but appearing to have no business activities
• employees that do not have an employment relationship
• employers claiming for employees while having no pay as you go withholding role
• partnerships where each partner makes a separate claim or where partners are identified as employees
• individuals making claims for multiple businesses such as a director claiming for two or three companies or sole traders who are also employees of another business.

Fraudulent applications – examples include fake employees; amendments to a prior year business activity statement to satisfy the turnover test; deliberate income deferral schemes; and falsification of invoices.

Members’ questions

What sort of compliance can people expect over the next 12 months? Will JobKeeper verification activities trigger full audits?

• Generally, verification activities will not lead to full audits, unless there is evidence of a scheme or fraud or other issues that cannot be ignored.
• For the immediate future the ATO will continue to identify high risk behaviours with a focus on the eligibility element.
• The ATO will review all information received via the Tip-off hotline.
• The future may involve reviewing industries considered high risk to assess compliance.

Are you going to check businesses whose turnover has not dropped by the minimum required?

• The ATO will not be doing audits where the turnover amounts provided in the form are different to the actuals but will be looking at tolerances and situations where there is evidence that turnovers have been artificially changed.

Will every compliance area of the ATO be conducting their own programs?

• The ATO has an overarching strategy but there will be different treatments based on the risk in each market.

Is there information available about the volume of eligible businesses, how many have claimed, and the number of employees impacted?

• The ATO does not have this information to hand but will provide an answer out-of-session.

What percentage of dubious behaviour are you seeing in the relevant markets?

• There is some concern about community misunderstanding that might be contributing to a sense that there is a large volume of issues with the scheme.
• Considering the scale of the program we are reasonably comfortable with the volume of issues.

As the tax treatments for the various stimulus measures vary does the ATO have a checklist or something similar that would summarise the tax treatments?

• There is information on the tax treatment for each measure but not a combined product. ATO will consider if a summary can be provided.

What approach to reviews is being considered?

• Generally, the first step is verification of an issue - this will only escalate to a more in-depth approach if information is not provided or clarified. There is information the ATO does not have that impacts on eligibility such as the age of employees.
• The approach will vary across the different markets.

Are there issues or areas of concern with intermediaries?

• At this stage no issues or areas of concern have been identified.

Other business

The ATO acknowledged that intermediaries are under a lot of pressure supporting clients claiming stimulus measures, with tax time about to commence and deferred lodgments.

The ATO noted that there is a process in place for intermediaries to request lodgment deferrals and encouraged them to use it rather than phoning the Contact Centre.

The COVID-19 ATO debt engagement strategy topic will be held over to a future meeting.