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  • Better practice governance and JobKeeper payments for large public and multinational groups

    The JobKeeper record-keeping requirements are covered by sections 14 to 18 of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020External Link.

    Employers need to satisfy record keeping requirements to be entitled to JobKeeper payments. These include:

    • evidence to support the decision to enter into the JobKeeper scheme, including evidence
      • the employer is eligible, and
      • the original decline in turnover test was satisfied
       
    • notification electing to participate in the scheme
    • nomination notices received for eligible employees
    • evidence that employee eligibility criteria is satisfied
    • evidence that eligible employees have been paid in accordance with JobKeeper obligations
    • monthly declaration of current and projected GST turnover
    • evidence that you meet the actual decline in turnover test if applying for the JobKeeper extensions.

    For large public and multinational groups, we have three principles to guide businesses on what is better practice in terms of substantiating claims for JobKeeper payments.

    If you follow these principles, you should have confidence that claims are sufficiently documented and supported. Incorrect claims could involve repayment, interest and penalties.

    Principle 1: Leverage existing corporate governance

    If you are a large public group or multinational business, you are likely to have existing corporate governance processes and controls in place.

    We recommend leveraging these existing processes and controls to manage the eligibility and record-keeping requirements for JobKeeper payments. Do this at the time of entering the scheme and subsequent periods.

    Our Tax Risk Management and Governance Review Guide outlines controls we consider as part of a better practice tax governance framework. Although the guide is specific to the management of tax risks, the principles embodied in it can be adapted for claiming JobKeeper payments. For example:

    • Board-level control 3: The board is appropriately informed. The board has been briefed by management about the JobKeeper requirements and obligations. The board endorses the business entering the scheme.
    • Managerial control 1: Roles and responsibilities are clearly understood. The staff, management and board roles are clearly defined and understood. This includes appropriate training and segregation of duties for JobKeeper payments among relevant tax, finance, human resource and payroll staff.
    • Managerial control 3: Significant transactions are identified. Any major transactions are considered to see if any affect the entitlement to claim JobKeeper payments.
    • Managerial control 5: Record keeping policies. The business has procedures to support the mandatory record keeping requirements for JobKeeper payments.
    • Managerial control 8: Complete and accurate disclosures. The business has assurance that disclosures have been reviewed and approved before claiming JobKeeper payments.
    • Managerial control 9: Legal and administrative changes. The business reviews law and administration changes to JobKeeper payments. Then updates processes, procedures and systems if required.

    As JobKeeper payments are for a limited period, we do not plan on conducting justified trust reviews of the control framework. Any compliance activity would focus on the substantive entitlement to the JobKeeper payments.

    Principle 2: Keep good records

    Records relating to employer and employee eligibility, including your employees' payment rates, may be examined by us.

    For the original and actual decline in turnover tests, you must keep supporting work papers and reports that set out the:

    • calculation of your current and projected GST turnover, and
    • steps required to modify this calculation as per the JobKeeper rules.

    We also expect records to be kept on the calculation of aggregated turnover in determining which rate applies.

    To work out projected GST turnover for the original decline in turnover test, the natural systems and processes a business uses are a good source of evidence to support any assumptions and predictions. For example, we would expect larger businesses to be able to refer to:

    • regular business forecasting of revenue or sales, which have been revised to reflect the impact of changes in the economic conditions
    • reporting to senior management, and potentially the board, about future expectations
    • reporting to the financial markets.

    More examples of evidence that would support a prediction of supplies likely to be made are listed in LCR 2020/1: JobKeeper payment – decline in turnover test.

    For employee eligibility, you should document how you validated employee eligibility. Your eligible employees outlines the issues.

    For employee nomination notices, you should keep records to document that your employees have agreed for you to claim the JobKeeper payment for them.

    You must pay your eligible employees at least the JobKeeper amount. This is the case even if they earn less than this per fortnight. You should keep records to document how you have satisfied this requirement.

    Principle 3: Make a reasonable assessment of projected GST turnover

    Your projected GST turnover for the original decline in turnover test needs to be a reasonable assessment of what was likely at the point in time you calculated the test.

    If there is a significant difference between your projected GST turnover and what eventuates, we would likely make further enquiries to ascertain whether your projection was reasonable.

    The judgment of whether a reasonable assessment has been made depends on the circumstances of your business. The question is whether a reasonable person under the same conditions would have taken more care in making the assessment. Large public and multinational groups generally have more sophisticated corporate governance systems. This will be reflected in the standard applied.

    Better practice for making a reasonable assessment includes:

    • calculations prepared by personnel with experience and knowledge of the business and forecasting future business performance
    • senior and experienced personnel reviewing and signing off the calculation of projected GST turnovers. We expect any calculations to be reviewed and signed-off by senior management experienced and knowledgeable about the business and forecasting future business performance
    • more robust evidence where there is more doubt about, or reliance on, certain assumptions. For example, a large business that predicts a decline that is only slightly in excess of 30% (or 50% as applicable) would be expected to more closely scrutinise the reasonableness of the projections and assumptions
    • documented procedures explaining variances between the projected and actual outcomes and evidence these have been followed. There should be more robust evidence where there is a significant variance between the projected and actual outcomes
    • analysis of turnover that does eventuate and significant differences explained. We expect contemporaneous documentation be prepared shortly after the turnover test period ends to understand the reasons for variances.

    For completeness, we emphasise that these better practices provide guidance for what would be considered reasonable and are not intended to be prescriptive.

    See also:

      Last modified: 16 Sep 2020QC 63693