Employers cautioned over ‘hard and fast’ decline in turnover eligibility
Accountants assisting clients with the JobKeeper extension have been urged to pay close attention to the actual decline in turnover test, with the ATO unable to offer leeway for those who come just shy of the requirements.
With JobKeeper now requiring entities to satisfy the new actual decline in turnover test, rather than the projected decline in turnover test used earlier in the program, the ATO will be required to follow the strict letter of the law in ensuring the requisite percentage declines are satisfied.
“[In JobKeeper 1], the legislation didn’t require the actual turnover to decline, so we saw a lot of organisations make a projection in a very difficult environment... and a lot of those projections didn’t pan out and that’s fine,” said ATO assistant commissioner Sandra Farhat on a recent ChangeGPS webinar.
“But moving into the extension, that is the test; the test is an actual decline.
“There is really no discretion in relation to decline in turnover, so there is no ability for the ATO to say, ‘Well, you were close, just not close enough, but we’ll let you through’ — the 30 per cent is a hard and fast legislative requirement.
“It is a significant change from a projected decline in turnover to an actual decline in turnover.”
The approach is a shift from the “sympathetic and understanding” stance that the ATO committed to earlier in the year when queried on how it would police the projected decline in turnover estimates.
ATO second commissioner Jeremy Hirschhorn told a Senate inquiry in May that the ATO would not nitpick turnover estimates that fell just short of the requirements because the law had merely required entities to make a reasonable estimate.
“If it ultimately turns out that the estimate was overly pessimistic and a business only went down 29 per cent, instead of an estimated 35 per cent, that is OK; what the legislation requires is a reasonable estimate,” Mr Hirschhorn said earlier this year.
Clawing back JobKeeper payments
The ATO’s confirmation of its new position comes as it releases fresh guidance on how it will manage JobKeeper payments that were incorrectly paid out.
For payments that were made because of an honest mistake, the ATO will not seek to recover these payments.
The facts and circumstances of each case will be considered, including whether the mistake was made earlier in JobKeeper when there was less public guidance.
Entities that did not take reasonable steps to check their eligibility will not be considered as having made an honest mistake.
Where payments will need to be repaid, the Tax Office will write to the entity to inform it of the reasons for clawing back the payments, how much needs to be repaid, and how repayments can be made.
Objections will be considered, while payment plans will be made available to those who aren’t able to pay on time.
The ATO also notes that it will generally not impose administrative penalties for JobKeeper overpayments that were the result of a mistake.
However, administrative penalties will apply if there is evidence of deliberate actions to obtain JobKeeper payments that an entity would not have otherwise been entitled to.
Jotham Lian
23 October 2020
accountantsdaily.com.au
Hot Issues
- FBT Reminder – Odometer Reading
- ATO’s debts on hold campaign prompts new IGTO guidance
- A comprehensive collection of small business benchmarks
- The 2025 Financial Year tax & super changes you need to know!
- Underperforming employees: When can you terminate?
- A comprehensive list of guides to industry specific tax deductions.
- ‘Renewed concerns’ about economy sees consumer sentiment dip: Westpac
- Oldest Buildings in the World.
- Small businesses may ‘collapse under strain of payday super’, IPA warns
- ATO’s hands tied with scrapping on-hold debts, expert says
- What Drives Your Business Growth and Profits?
- Australian Taxation Office (ATO) shifting to firmer debt collection activity
- Why employee v contractor comes down to fine print
- Sharing economy reporting regime for platform operators
- Countries producing the most solar power by gigawatt hours
- Illegal access nets $637 million
- Accessing superannuation benefits.
- Does your business have a company Power of Attorney?
- Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
- GrantConnect
- 2 in 3 SMEs benefit from instant asset write-off, survey reveals
- Updated guidance on R&D claims
- Do you know how to recover debts?
- Wheat Production by Country
- Types of small business benchmarks
- What is a Commercial Lease?
- ATO warns advisers against suspect R&D tax claims
- The year of workplace law upheaval
- Vimeo test
Article archive
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014
October - December 2020 archive
- 2020 is coming to an end. Phew!!
- Victorian State Budget Overview 2020 - 2021
- Employee Christmas Parties and Gifts – Any FBT?
- FBT – Christmas Parties and Taxi Fares
- JobMaker hiring credit given green light despite ongoing concerns
- Super, death, and taxes
- ATO extends JobKeeper deadlines ahead of Christmas
- Small-business coronavirus grants set to be income tax-free under new bill
- How Australians are taking advantage of income tax cuts
- Part 1 – Budget reminders. Under the Hood.
- Part 2 – Budget reminders. Under the Hood.
- Part 3 – Budget reminders. Under the Hood.
- Comprehensive list of COVID-19 initiatives and packages.
- Businesses not meeting obligations warned as ATO restarts compliance programs
- Employers cautioned over ‘hard and fast’ decline in turnover eligibility
- ‘Follow the spirt of the law’, warns ATO
- $120m in JobKeeper clawed back by ATO, new compliance areas highlighted
- Budget 2020 - A very comprehensive break down.
- Budget 2020 - Fact Sheets
- Budget 2020 - At a Glance, Overview, Outlook
- Temporary home office expenses shortcut extended again
- JobKeeper extension – changes implemented
- JobKeeper Participants – are “workers”
- Commissioner registers updated JobKeeper alternative tests
- Varying Pay As You Go (PAYG) Instalments
- Reminder of Medicare Levy Surcharge (MLS)
What our clients say about us