Date posted: 06/05/2020

ATO guidance on JobKeeper integrity rules helps set practical ground rules

The ATO’s Practical Compliance Guidelines PCG 2020/4 deals with arrangements which could be considered ‘schemes’ designed to exploit JobKeeper.

The latest ATO compliance guidelines on when the integrity rules in the JobKeeper legislation will and won't apply comes at a time when accountants are under enormous pressure from struggling businesses to access the JobKeeper wage subsidy as soon as possible.

An ABS survey today found that three in five (61%) businesses had registered or intended to register for the JobKeeper Payment scheme and of those, 73% expected more than half of their employees to be eligible.

The ATO's Practical Compliance Guidelines PCG 2020/4 deals with arrangements which could be considered 'schemes' designed to exploit JobKeeper, said Michael Croker, Tax Leader at Chartered Accountants Australia and New Zealand.

"The guidelines give accountants and their clients some valuable insights into the ATO's thinking on various scenarios that we have put to them," said Mr Croker.

Importantly, the guidance says the Tax Commissioner will look at the contextof the business operating environment and ask two key questions:

  1. Has the business been significantly impacted by external environment factors beyond its control?
  2. Are the actions in excess of those that would maintain pre-existing employment relationships?

Mr Croker said the latest ATO guidance highlights the importance of getting quality advice, documenting the circumstances justifying claims for COVID-19 business benefits and works alongside the ATO's earlier guidance on schemes to access Cashflow Boost, targeting so-called 'pop-up' employer and employee arrangements.

"Accountants worry about the 'do-it-yourself' JobKeeper and Cashflow Boost applicant who makes contact a few months from now seeking expert help, saying the ATO has questioned the entitlement to COVID-19 support," said Mr Croker

"Overpayments can be clawed back by the ATO with penalties and interest."

"The ATO has an integrity unit already on the job where suspicious claims are made for COVID-19 benefits and that's entirely appropriate."

Another JobKeeper Legislative instrument published

Additional JobKeeper legislative rules were also published late last week as a result of the Treasurer's 24 April 2020 announcement.

Importantly, they potentially provide JobKeeper access to a service entity which employs workers and supplies them to other members of a corporate group or GST group. A modified decline in turnover test is now available in such structures.

"Instead of using the employer entity's turnover, the sum of the turnovers of each member in the group is used to determine JobKeeper eligibility," said Mr Croker.

"We are expecting another Legislative Instrument to be published this week dealing with superannuation aspects of JobKeeper."

Practical Compliance Guideline

Summary of ATO’s guidance on JobKeeper schemes (PCG 2020/4)

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