On Wednesday 24th March the ATO announced that over $64 million was paid to Australian businesses out of error under the JobKeeper wage subsidies scheme. The ATO has made it clear that it won’t be pursuing this huge amount of money as employers have claimed the money “in good faith”.
The ATO has revealed that $283 million of the $90 billion distributed to businesses during the JobKeeper scheme was paid out of error before the ATO could stop the payments.
$138 million of the incorrectly paid money has been recovered, $82 million is currently being pursued, and $64 million will not be clawed back due to the Commissioner’s discretion.
The ATO has stated that it’s major reason for not clawing back the incorrect payments is because employers had relied on statements made by employees in their nomination notice and ultimately gave the payments onto employees.
The ATO has emphasised that “The employer has claimed based on the representations of the employee- the employee has to declare that they aren’t getting JobKeeper from anybody else, they’ve got to declare they are a resident, they’ve got to declare various things and the employer might rely on that in good faith, claim the money, pass it on the employee and the employer has not benefited”.
The ATO believes that it would be unfair to penalise an employer for the mistakes of employees who have received an incorrect JobKeeper payment.
Although the ATO is aware that $64 million is a lot of money. It is possible that it could cost the ATO even more money if they were to attempt to claw back the $64 million worth of overpayments from individual employees.
The ATO has revealed that by trying to pursuing the repayment of JobKeeper is a very costly exercise. To chase down $3,000 which is a months worth of JobKeeper would actually cost more than $3000 to recover this sum of money.
Another reason why the tax agency chose not to claw back the $64 million was because chasing it would defeat the original intention of the government’s policy.
The purpose of JobKeeper was to get the money out as quickly as possible. This was achieved as over 85 percent of payments were made within the first four days of its inception.
The tax agency justifies that if a little bit of money went to someone who wasn’t really entitled to it, they were probably not a high-income earner so they were most likely spending the money anyway, which sort of meets the policy considerations.
Despite the decision not to clawback $68 million, it will continue to chase down $82 million worth of JobKeeper payments. The clawing back of repayments will apply to businesses who have undertaken deliberate or reckless actions to access the wage subsidies despites not being entitled qualified to receive them.
Since the introduction of JobKeeper in March 2020, just under 3.8 million employees who are employed by over 1 million businesses, have been given access to a combined total of $80 billion worth of payments.
It can be revealed by the ATO that 31,600 applicants for the JobKeeper payment and about 231,000 applications for early withdrawal of super have been rejected as result of ineligibility or fraud. There are hundreds more cases which are currently being investigated.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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