By Karen Liew, Senior Tax Advocate Chartered Accountants Australia and New Zealand

In the past few months, the Australian Taxation Office’s priority has been to administer the Federal Government’s three economic stimulus packages and help those who have been financially affected by COVID-19.

With Australia’s success in flattening the curve for COVID-19 cases and the easing of restrictions, the government’s focus is now the long road to economic recovery. Watch out for the Treasurer’s much anticipated Economic and Fiscal Update on 23 July 2020. 

Accordingly, the ATO has now shifted its focus on COVID-19 fraud, using its access to a large number of data sources to assess the risk of inappropriate behavior.

Generally, the ATO has operated on the basis that Australians are honest and that the information provided is true and correct. Nevertheless, there have been a handful trying to rort the system and the ATO has taken action.

The ATO is now conducting checks, so if you've received a COVID-19 benefit that you are not entitled to, expect to hear from the ATO.

Having worked so hard to access COVID-19 stimulus benefits, CAs may now find themselves defending a client’s continued entitlement or helping with voluntary disclosures to the ATO.

What is on the ATO’s radar?

Here are the ATO’s ‘Big Three’ targets:

1. JobKeeper

Ensuring that:

• entities meet the eligibility requirements in relation to business income 
• entities are claiming only for ‘eligible’ employees
• eligible business participants (sole traders, partnerships, trusts and companies) are correctly making claims
• entities are not manipulating turnover to satisfy the decline in turnover test.

2. Boosting cash flow for employers

Looking at employers that:

• artificially restructure businesses to gain access to the cash-flow boost
• artificially change the character of payments to salary or wages to maximise the cash-flow boost
• inflate reported withholding amounts to maximise the boost
• resurrect dormant entities or engage in ‘phoenixing’ arrangements
• make false statements or fraudulent attempts to create an entitlement.

3. Early release superannuation

Behaviours that are attracting attention include:

• applying when there is no change to regular salary, wage, or employment information 
• artificially arranging affairs to meet the eligibility criteria
• making false statements or fraudulent attempts to meet the eligibility criteria
• withdrawing and re-contributing super for a tax advantage – this could not only trigger anti-avoidance rules but also result in additional taxes and impact your eligibility for a super co-contribution.

If you find you have been receiving a COVID-19 benefit you are not entitled to, the ATO Second Commissioner Jeremy Hirschhorn says: “for anyone who, with the benefit of hindsight, has done something they now regret, I strongly recommend you seek professional advice and support and look to get on the front foot with a voluntary disclosure to the ATO – it's a whole lot better than waiting for an audit or criminal investigation. 

“Similarly, for anyone who has made an honest mistake, by taking the initiative and calling us, we can help you remedy your affairs with empathy and understanding.”