Small Business Stewardship Group special briefing 8 July 2020
COVID-19
JobKeeper compliance approach
The ATO outlined our JobKeeper compliance approach which was recently published on ato.gov.au.
Generally, 96% of all payments are made within four days with minimal intervention. Most claimants are doing the right thing. We are detecting only a few instances of fraud or opportunism.
Our compliance approach will first look to quickly correct honest mistakes, that is, not fraud or careless disregard. Then, we will dig deeper to detect fraud and or opportunism.
Some initial payments are made in the interest of getting payments out quickly to help stimulate the economy. We may then seek further information from some claimants before subsequent payments are made.
Around 2% of JobKeeper claims are held for integrity checks. Members noted these delays may cause cashflow issues for small businesses. The ATO noted once appropriate evidence is provided, payments will be made as soon as possible.
The ATO also noted that JobKeeper payments being paid to employees in arrears is a matter of policy.
ATO call centre staff understand this is a very stressful time for callers and have been trained accordingly.
Member insights
A member had heard about cases where in good faith an employee reports to their employer they are eligible for JobKeeper, then subsequently finds out they were not eligible. In the meantime, the employer receives a JobKeeper payment in relation to that employee and pays the employee. When the employer rings the ATO to enquire, they are told they now have a debt with the ATO, which they need to recover from the employee. The ATO undertook to look into this issue and to check scripting for call centres.
Other issues raised related to entities who commenced business on or after 1 January 2020 and as a result are unable to satisfy the requirement to have included business income as their assessable income for the 2018–19 income year. In these cases, the entity needs to rely on having made supplies in a tax period applying to it, ending before 12 March 2020. Sole traders who commenced business post 1 January 2020, are not registered for GST on a monthly basis and who do not have employees are ineligible for JobKeeper as they do not meet the criteria for a business as at 12 March 2020.
This timing issue can have the same impact on cash flow boost eligibility. The Commissioner has no discretion in these cases.
Debt and lodgment update
The ATO understands that clients have been impacted differently by the COVID-19 crisis. We are trying to understand how we should engage with the community. It is important for the ATO to continue engaging with small businesses about their debt and lodgment obligations so there are no surprises for them.
The three principles guiding our debt engagement strategy are:
- gradual – we are intentionally starting slowly
- contemporary – using the right language and ensuring our correspondence is as user-friendly as possible
- sensible – adapting our engagement by tailoring our approach based on industry and geographically different sections of the community, as well as considering state and industry-based issues.
The first phase of our engagement strategy will be focussed on support. When we commence any outreach, it will be to ask how we can help the client.
We have commenced a small pilot to test our strategic approach. This pilot is based on checking in with clients to see whether they are willing and able to start talking about debt.
The lessons from the pilot will be used to inform how we tailor our debt engagement strategy. We are mindful it is currently tax time and our interactions have been predominantly targeted to self-preparers, so we do not over-burden tax practitioners.
Member insights
It is important for small businesses to be aware of any debts they might have with the ATO. Australian Small Business and Family Enterprise Ombudsman (ASBFEO) noted they are encouraging small businesses to see their financial advisers for a viability assessment.
Stress levels in the community are escalating. The ATO appreciates these sensitivities and has ensured staff involved in the pilot have been specifically trained for their interactions with vulnerable clients. Training tools are being rolled out more broadly.
The second wave of lockdowns in Victoria is demoralising. For many businesses, they had just reopened and are now back to square one. The new restrictions are also having a big impact on border towns.
Small businesses are seeking certainty about what will happen after September, when JobKeeper and other measures are due to end. A member asked the ATO to provide some reassurance by stating it will not be issuing demands for repayment immediately after the end of these measures. Such assurance would also help tax practitioners who are trying to support their small business clients at this time.
Agency updates
ASBFEO is looking forward to some certainty following the Government’s review of the stimulus program and following the Economic and Fiscal Update on 23 July.
There is still some work to be done on commercial tenancies and the tax treatment of deferred rent.
The Department of Industry, Science, Energy and Resources noted the Payment Times Senate Review report is due at the end of July before the bill is considered by parliament in August.
Minister for Employment, Skills, Small and Family Business Michaelia Cash released a press releaseExternal Link on 1 July 2020 highlighting the reduction in tax rate for incorporated small businesses with a turnover of less than $50 million from 27.5% to 26%.
Member insights
The group discussed potential implications of the new Victorian lockdown on the viability of small businesses and mental health of their owners. All agencies expressed empathy and understanding regarding this situation and will be cognisant of this changing situation when engaging clients.
ATO noted the Review and Dispute Resolution area is examining ways to speed up their objections processes and will look at opportunities to use clearer language in their communications.
Communication update
The following updates were emailed to members out-of-session over recent weeks:
Summary of key topics discussed at the Small Business Stewardship Group meeting 8 July 2020.