ATO Focus in Relation to JobKeeper

The ATO has published a webpage entitled Keeping JobKeeper payment fair. In it, the ATO identifies what it sees as areas of concern in relation to JobKeeper, including what may constitute “fraudulent behaviour”.

In relation to businesses, the ATO is examining those that have:

• made claims for employees without a nomination notice or have not paid their employees the correct JobKeeper amount (before tax);
• made claims for employees where there is no history of an employment relationship;
• amended their prior business activity statements to increase sales in order to meet the turnover test; and
• recorded an unexplained decline in turnover, followed by a significant increase.

It is also investigating individuals who have knowingly:

• made multiple claims for themselves as employees or as eligible business participants; or
• made claims both as an employee and an eligible business participant.

There is concern about behaviour in what the ATO calls the “JobKeeper extension period” (27 September 2020 to 28 March 2021). This refers to actions that:

• allowed JobKeeper access to entities that would otherwise not meet the actual decline in turnover test (eg deliberately manipulating the timing of billing or receipt of payments);
• deliberately assessed employees or eligible business participants to a higher payment tier than they were eligible to receive.

JobKeeper payments traded off for employee entitlements

The ATO is paying special attention to situations involving employee rights. It states that, in general, employers were entitled to claim JobKeeper until 28 March 2021 even if the employee is likely to be made redundant after that date. However, it would be concerned if a scheme was entered into where:

• the employee would not receive certain entitlements (such as a redundancy payment) when the employment ends, or they would receive reduced entitlements; and
• wages received by the employee are paid in substitution for payment of entitlements.

The ATO provides the following example.

Employee made redundant after 28 March 2021

Malith is an employee of Wicket’s Sports Emporium. Wicket’s Sports Emporium advises Malith in January that they will make him redundant. Malith’s role has effectively come to an end and there are no further duties for him to carry out.

However, Wicket’s Sports Emporium gives Malith the option of continuing to receive salary that meets the minimum wage conditions for JobKeeper until the end of March. This option is only provided if he forgoes his entitlement to an eight-week redundancy payment. The salary can be seen as in substitution for the eight-week redundancy payment Malith would normally expect to receive.

In this situation Wicket’s Sports Emporium’s eligibility to those JobKeeper payments may be denied, based on there being a contrived scheme.

Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas. 

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