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  • Keeping JobKeeper fair – extension focus areas

    We have worked closely with clients to help them get their JobKeeper applications correct. Our JobKeeper assurance reviews have identified that the vast majority of businesses have done the right thing.

    Where we have identified errors or misunderstandings we have treated many of those as honest mistakes.

    However, we have detected some businesses that have sought to inappropriately take advantage of the benefits of JobKeeper. In these cases, we have been firm in requiring them to repay JobKeeper overpayments. In some instances we have also applied administrative penalties and pursued offences for false and misleading statements.

    Examples include:

    • large businesses that applied the 30% decline in turnover threshold when they were required to apply the 50% decline in turnover threshold
    • businesses that manipulated their sales in order to change their projected GST turnover to meet the decline in turnover test
    • businesses that backdated employment relationships to misrepresent employee eligibility in order to claim more JobKeeper payments
    • businesses that failed to meet the wage condition in relation to their employees by not paying them the full JobKeeper amount
    • individuals who controlled multiple businesses and deliberately claimed JobKeeper for themselves as the eligible business participant multiple times.

    See JobKeeper overpayments for more information on our approach to treating these types of cases.

    JobKeeper extension

    JobKeeper eligibility and payment conditions have now changed. We continue to maintain the integrity of the JobKeeper scheme through our compliance activities.

    We will monitor the issues that we identified as areas of concern from the original JobKeeper stimulus measure, including businesses that:

    • did not meet the decline in turnover test
    • do not meet the wage condition for their employees
    • claim JobKeeper for individuals who are not eligible employees or from whom they do not have a nomination notice
    • claim JobKeeper for more than one business participant, for example by disguising them as employees
    • claim JobKeeper for individuals who are not eligible business participants.

    We will also be monitoring the new requirements introduced under the JobKeeper extension. In particular, we will be reviewing businesses that:

    • appear to have contrived eligibility for the JobKeeper extension by manipulating their GST turnover to meet the actual decline in turnover tests
    • have claimed the incorrect, higher tier rate for their employees, eligible business participants or religious practitioners when they should have been on the lower tier.

    Helping where honest mistakes have occurred

    Honest mistakes can and will happen in certain circumstances. We will continue to help businesses that have tried to do the right thing but have made honest mistakes.

    However, we expect less mistakes to occur as the JobKeeper scheme continues and businesses become more familiar with their obligations.

    We encourage all JobKeeper applicants to review their applications and contact us if they have made mistakes. We have the discretion to not pursue repayment of an overpayment in certain circumstances, for example, where we determine that both:

    • an honest mistake was made
    • an entity has not retained a benefit.

    We have published guidance in relation to the overpayment discretion.

    JobKeeper extension areas of focus

    In addition to our existing focus areas, we have two new areas of focus for compliance with the JobKeeper extension:

    We have also provided guidance about our compliance approach for eligible business participants and businesses that can’t operate.

    Actual decline in turnover test

    To qualify for JobKeeper payments you must satisfy the relevant decline in turnover tests. To access JobKeeper payments from fortnights from 28 September 2020 an additional actual decline in turnover test must be satisfied.

    Businesses should be aware that there are differences between the original decline in turnover test and the new actual decline in turnover test.

    We will be monitoring businesses that have:

    • apparent irregularities in their current GST turnover in the September 2020 or December 2020 quarters which may be due to
      • omitting sales from their reporting
      • delaying or altering the recognition of their sales from normal practices
       
    • unusual amendments to their business activity statements which inflate their sales for the relevant comparison periods.

    Where necessary, we may ask more questions of businesses that have:

    • selected an alternative test (as we may not have access to the information or records to consider)
    • indicated that the GST sales reported at the G1 label (less GST) in the business activity statements are not representative of the current GST turnover under the JobKeeper rules.

    If we review your decline in turnover assessment, we will ask you to provide documentation to support your current GST turnover calculations for each relevant period, including:

    • sales and trading records
    • sales contracts or customer correspondence
    • invoices issued
    • bank statements.

    Example

    Billy’s Beef Pty Ltd sells wholesale meat. In early September 2020, the finance manager of Billy’s Beef Pty Ltd researches the actual decline in turnover test for the JobKeeper extension. They calculate that the company will likely have a 25% actual decline in turnover for the September 2020 quarter compared to its comparison period.

    The finance manager changes the date of several September invoices to 1 October 2020. This reduces the company’s GST turnover in order to meet the 30% decline in turnover threshold for the September quarter.

    When we detect this behaviour, we require Billy’s Beef Pty Ltd to repay its JobKeeper overpayments. We also apply an administrative penalty.

    End of example

    Claiming the incorrect higher tier rate of JobKeeper payment

    From 28 September, the JobKeeper payment rate will depend on which payment tier applies to each eligible individual.

    The higher Tier 1 rate applies if the individual satisfies the 80-hour threshold test.

    We will be monitoring entities that claim the higher rate. We may ask them to:

    • verify how they assessed the individual as meeting the 80-hour threshold
    • provide documentation to support their assessment.

    Examples of suitable documentation may include:

    • the declaration of the business participant
    • employment records, such as payroll data or time sheets and other attendance records
    • employment contracts
    • business diaries, appointment books and logbooks
    • records of store trading hours
    • hours billed
    • invoices issued
    • records prepared for another business or statutory purposes.

    If we do review your assessment of employees, eligible business participants or religious practitioners to the higher tier, we will generally agree to maintain it if you can show that you have:

    • considered the JobKeeper Rules or our website guidance
    • made a reasonable and genuine attempt to work out the 80-hour requirement based upon the business records available to you from the reference period
    • had, where applicable, applied the Commissioner’s Legislative Instruments in good faith.

    Example – Eligible for higher tier

    Jessica is a sole trader operating as an architect from her home office. She assesses that she has met the actual decline in turnover test to be eligible for the JobKeeper extension. She then considers which payment rate she is eligible to claim.

    Jessica reviews her business diary and invoices issued for February 2020, which was a normal trading month for her business. She notes that she had meetings and took calls from clients on 20 days in the month and that on all of those days she spent at least five hours working on developing plans and consulting with her clients.

    On that basis she:

    • establishes that she was actively engaged for at least 100 hours in her business that month
    • applies for the higher payment tier when making her JobKeeper application.

    When her application is reviewed, Jessica can support her assessment of her eligibility to the higher tier by producing her business records, including copies of the relevant pages in her business diary, the contracts signed with her clients that month, invoices issued and the explanation that she has used to support her conclusion.

    End of example

     

    Example – Eligible for higher tier

    Ken is a partner in a partnership which operates a retail business. He is actively engaged with the business by attending the store and undertaking administrative work. Ken assesses that the partnership has met the actual decline in turnover test to be eligible for the JobKeeper extension. He then considers which payment rate he is eligible to claim.

    Ken reviews the trading hours of the store in February 2020, which was a normal trading month for the business. He notes that he would ordinarily attend the store three and a half days per week, with his partner attending during the other hours. The store’s opening hours are 9am to 5pm. On that basis, he establishes that he was actively engaged for 112 hours in the business that month and applies for the higher payment tier when making his JobKeeper application.

    When his application is reviewed, the partnership can support the assessment of Ken’s eligibility to the higher tier by producing evidence of the store’s trading hours and the explanation of Ken’s attendance at the store. The evidence is corroborated by his partner.

    End of example

     

    Example – Not eligible for higher tier

    Amir is a sole trader operating a mobile dog wash. He assesses that he has met the actual decline in turnover test to be eligible for the JobKeeper extension. He then considers which payment rate he is eligible to claim.

    Amir reviews his bookings and invoices for February 2020, which was a normal trading month for his business. Without undertaking too much analysis, Amir estimates that he was actively engaged for approximately 80 hours in his business that month. He does not produce any calculations of the length of each booking or how much time he spends on administrative tasks.

    Amir applies for the higher payment tier in his JobKeeper application. When his application is reviewed, Amir cannot support his assessment of his eligibility to the higher tier as he cannot produce any evidence to support his estimation of the hours he was actively engaged. Therefore, he is required to repay the difference between the higher tier payment and the lower tier payment. We may also apply a penalty for making false and misleading statements.

    End of example

      

    Example – Not eligible for higher tier and penalised

    Vanessa operates a café and has ten casual employees who have all worked for her continuously since January 2019. She assesses that she has met the actual decline in turnover test to be eligible to claim JobKeeper payments under the JobKeeper extension.

    Vanessa reads the information on our website about the payment tiers. Based on her recollection of the February 2020 trading hours she believes that neither her or her employees would be eligible for the higher tier.

    Despite this, Vanessa claims the higher tier for herself, as the eligible business participant, and all of her employees. She does this without reviewing payroll data or her business records from February 2020. In addition, Vanessa does not tell her staff that she has continued to apply for JobKeeper. She only pays them their ordinary wages for hours worked in October 2020, which is less than the $750 per fortnight JobKeeper amount.

    When her application is reviewed, Vanessa provides records that show none of the ten employees worked for more than 80 hours in the reference period. She was not able to provide any evidence to support the assessment that she was actively engaged for more than 80 hours in the reference period as the eligible business participant.

    Vanessa is required to repay:

    • all of the JobKeeper payments she received under the JobKeeper extension in relation to her employees
    • the difference between the higher payment tier and the lower payment tier in relation to her the eligible business participant claim.

    An administrative penalty is also applied on the basis that Vanessa intentionally disregarded the law by both:

    • claiming the higher tier without justification
    • not meeting the wage condition for her employees.
    End of example

    Eligible business participants and businesses that can’t operate

    The JobKeeper rules require an eligible business participant to be actively engaged in the business in the JobKeeper fortnight to which a payment relates. We acknowledge that many Australian businesses have not been able to actively operate due to the impact of the COVID-19 pandemic.

    In these circumstances, we recognise that an eligible business participant may still have been actively engaged in a business even if the business is temporarily not able to sell goods or provide its services due to restrictions. Providing that the business has not ceased entirely, the eligible business participant may still be eligible.

    Example – Business shuttered and eligible business participant

    Greg owns and runs the pro-shop at the Green Grasses Golf Club. The shop has been closed since 1 July due to COVID restrictions. Greg has been nominated as the eligible business participant for JobKeeper. In the JobKeeper fortnights since the pro-shop has been closed, Greg has continued to liaise with the members of the golf club and attend to other administrative tasks associated with running the business of the shop. We accept that Greg has been actively engaged in the business of the pro-shop in the JobKeeper fortnights after 1 July.

    End of example

    How to raise concerns about wrongdoing

    If you are concerned that someone is doing the wrong thing in relation to the JobKeeper payment, you can tell us about it. To report illegal or behaviour of concern, see Making a tip-off. We will be examining JobKeeper tip-offs and contacting businesses where we have concerns and need more information.

    If you are concerned that you have been incorrectly excluded from JobKeeper in breach of the one-in-all-in rule, we encourage you to first discuss this with your employer. If you continue to have concerns, please phone us on the ATO Tip-off hotline on 1800 060 062.

    If you have questions about workplace entitlements and obligations in relation to the JobKeeper payments the Fair Work Commission has released guidance on how it can help with JobKeeper disputesExternal Link.

    Last modified: 27 Oct 2020QC 64083