ATO has issued JobKeeper guidance on how it will apply compliance resources against schemes set out to obtain access to the JobKeeper payment. An entity’s entitlement to JobKeeper payment may be denied in whole or in part under section 19 of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020.
The ATO focus will be on entities that accesses or increases JobKeeper payment entitlements where the entity’s business is not significantly affected by external environmental factors beyond its control. The ATO has indicated the following circumstances as generally low-risk:
- If the external operating environment is affected by factors beyond the control of the entity (and its related parties), and
- That affected external operating environment significantly impacts the business of the entity, and
- The entity enters into the scheme in response to that impact and satisfies the decline in turnover test, and
- The JobKeeper payment the entity receives is for individuals who were employed by the entity and serving in the significantly impacted business prior to that time and who remain employed as a result of that JobKeeper payment,
- The Commissioner generally will not apply compliance resources to consider the application of section 19. https://www.ato.gov.au/law/view/document?LocID=%22PAC%2F20200037%2F19%22
Section 19 however does provide that if one or more entities enter into or carry out a scheme for the sole or dominant purpose of obtaining a JobKeeper payment, or an increased amount of a JobKeeper payment, the Commissioner may determine:
- That the entity was never entitled to the JobKeeper payment, or
- The amount to which the entity was entitled was always the amount specified by the Commissioner in the determination.
In such cases the ATO is able to recover any overpayments and will have the power to impose significant penalties and interest.
The guidance also sets out a number of examples to provide insight to Taxpayers on how the ATO might apply its conclusions that a Scheme does or does not exist:
- Deferring the making of supplies to obtain the JobKeeper payment
- Bringing forward the making of supplies solely to obtain the JobKeeper payment
- Transfer of assets without any decline in external revenue
- Employer entity that reduces a service fee
- Employer entity stands down employees
- Employer entity unable to pay
- Parent company of a corporate group that reduces management fees
- Parent company of corporate group manipulates timing of management fee
For further information follow the link https://www.ato.gov.au/law/view/view.htm?docid=%22COG%2FPCG20204%2FNAT%2FATO%2F00001%22
Date of Issue: 5 May 2020 Author: Noé Vicca
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