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  • Private Groups Stewardship Group special briefing 18 May 2020

    COVID-19

    JobKeeper payment

    The ATO has had a significant focus on implementation and public advice and guidance to help clients to ‘get it right’ from the start.

    Compliance strategies have also been a focus of the ATO. However, given this is a stimulus measure it has required a 'balanced approach', getting it right at the start but also building our compliance strategy to deal with any potential risks in a staged approach. This includes a focus on eligibility. We are looking at those who are eligible to get the JobKeeper payments as quickly as possible, but also looking at those that are not eligible to deter them from applying. We want to prevent payments from being made to those who are ineligible.

    The ATO is implementing a staged integrity approach:

    • Stop ineligible claims from entering the system - at enrolment phase, ineligible entities are unable to enrol e.g. bankrupt, ineligible entity type and registration for ABN post 12 March 2020.
    • Pre-payment verification process - sophisticated system checks examine turnover and the number of expected employees an entity might reasonably claim to employ. There are systems flags for entities who show no signs of business activity or who need their identity checked.
    • Post payment reviews that highlight new issues will be incorporated into subsequent period's integrity approach.

    There is a mix between genuine errors and mistakes. Most errors are from the 1 – 4 employee level e.g. small businesses and sole traders. The ATO will continue to support these clients to get it right from the start.

    As errors and eligibility issues are finalised, existing data will be used to identify any potential systemic fraud issues.

    Cash flow boost

    Our focus is on expediting cash flow boost credits to eligible businesses and deterring ineligible credits from being received.

    ATO processes continue to be refined. For example, businesses may have previously been considered ineligible due to limited information, where there were outstanding lodgments. Upon lodgment that business may now be eligible. A new tool has been deployed that updates client details daily. This means that the latest client information is available i.e. if they have lodged since their eligibility was initially considered, to determine eligibility.

    A new streamlined process has also been established to contact clients via telephone and verbally confirm details/information necessary to confirm eligibility rather than requesting additional documentation. We are looking to issue credits to eligible businesses as efficiently and effectively as possible.

    There is also a focus on compliance, to ensure that we deter those who are not eligible to receive cash flow boost credits. Risk models are in place to address behaviours of concern and identify deliberate, overtly artificial manipulation arrangements.

    The ATO will consider that some risk indicators may be for genuine reasons. Our approach is to get in contact with the client to confirm the information required to get the cash flow boost credits issued, where appropriate.

    Members’ comments

    Some clients have received cash flow boost where they thought they were ineligible. ATO automated systems are being refined to stop these instances. ATO confirmed that clients can contact their key agent manager to verify their eligibility or arrange repayment.

    Private wealth support for private groups

    JobKeeper payment

    Our continued focus is on pre-payment verification. We are engaging with clients to confirm information and progress payments as quickly as possible.

    Understandably, the community is wary of ‘scam’ calls and our dedicated teams have been experiencing requests for reverse ‘proof of identity’ where clients want to confirm it is the ATO that is contacting them. This is a positive and welcomed response.

    We are also receiving contact from clients we have previously proactively contacted. In those circumstances we are providing additional support as they move through the claim process.

    For the private wealth population, as expected, we have not identified any significant integrity issues at this stage.

    Cash flow boost

    In general, our client engagement has been focussed on aggregated turnover.

    Due to the structure of private groups, our information may not be complete as to who their affiliates/controlled entities may be. We have been contacting clients by phone to verify details of their affiliates/controlled entities and confirm their eligibility. In those cases where clients are unsure, we have provided them with further information and given them additional time to confirm.

    We are assisting a small number of clients who may have received a cash flow boost credit but are ineligible. We are providing those clients with a courtesy call when the credit has been reversed to help them understand what this may mean for them if the cash flow boost credit previously offset a 'payable' debit in their account.

    Our technical advice area continues to examine cases and improve our guidance. It was recently identified that call centre scripting was suggesting that global income should not be included for cash flow boost turnover purposes. This has now been updated.

    Early Release of Superannuation

    There have been a very small number of cases of identity theft. ATO systems have not been compromised.

    The ATO is continuing to work to improve processes and ensure integrity of the measure.

    Reportable Tax Position Schedule (RTPS) expansion to large private companies and corporate groups

    The requirement for large private companies to lodge an RTPS will still go ahead for the 2021 income tax year, noting that the lodgment generally will not be due until early 2022.

    We will be contacting the Private Groups Stewardship Group sub-working group this week to progress, with a focus on the proposed additional Category C questions, then subsequently looking to explore broader external consultation.

    Members’ comments

    Is there any overlay with the Top 500 approach which already includes much of what is in the RTPS?

    Generally Category C questions relate to Practical compliance guidelines, Taxpayer alerts or other guidance. To provide certainty to our clients, for the first year the ATO will notify which private companies will be required to lodge a RTPS for the 2021 income tax year. If they are not notified, they will not be required to lodge.

    Other Business

    More advice on Division 7A and minimum yearly repayments will be advised in the near future.

      Last modified: 29 May 2020QC 62761