The JobKeeper scheme ended on Sunday 28th March. The ATO has warned employers that they could potentially lose access to the wage subsidy payments if they deny workers their redundancy entitlements.
The Treasury has estimated that up to 150,000 employees across the country are likely to lose their job as a result of the discontinuation of JobKeeper. The scheme has cost the government an excess of $90 billion.
The ATO is keeping an eye out for schemes that consist of employees not receiving certain entitlements when the employment is finished, such as redundancy payments, or where wages received by the employee are paid in substitution for payment of entitlements.
According to the ATO, at the time when JobKeeper ended over 1 million employees and 370,000 businesses were being supported by the program.
The employers need assistance from their accountant to work out how best to respond to this challenge. The SME Recovery Loan Scheme could provide a source of external finance if required. Businesses owners should speak to their bank about taking advantage of this scheme.
It is predicted that somewhere around 8,000 businesses will become insolvent by the end of the financial year. This just a rough estimate and it is still too early to know the exact number and how big of an impact phasing out JobKeeper will have on the capacity for a business to remain financially viable.
Accountants across the country should consider contacting their clients who have been receiving JobKeeper in it’s final months. It is crucial for businesses to be aware if they are at risk of insolvent trading and any incurring debts that they are unable to pay.
Closing down a business is not just a case of shutting their doors and walking away. If a business goes about winding up the wrong way, the ramifications could have a huge impact on them for a long time. It is important for the business owners to work with their financial advisors to develop and implement and effective exit plan.
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.
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.
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