ATO claws back $120 million in JobKeeper payments from employers making “deliberate” or “reckless” mistakes

The Australian Taxation Office has taken back $120 million in JobKeeper payments from employers that made “deliberate” or “reckless” mistakes when applying for the wage subsidies.

However, the ATO says it has not detected widespread or systemic fraud of the federal government’s stimulus measures, including the $69 billion JobKeeper program.

The ATO has previously warned it would seek to recover funds in cases where businesses had incorrectly received JobKeeper payments, but these businesses would not be penalised if the overpayments occurred because a mistake was made. 

In guidelines published earlier this month, the ATO also said there may be cases where businesses would not be required to repay funds if the mistake made was “honest”.

ATO second commissioner Jeremy Hirschhorn confirmed this approach when disclosing the amount of JobKeeper repayments in Senate estimates hearings on Tuesday. 

As reported by the ABC, Hirschhorn said in cases where employers had made genuine mistakes, they were not required to repay funds but would be prevented from claiming JobKeeper payments in the future. 

While Hirschhorn said he would take a question about the number of employers to have made JobKeeper mistakes on notice, he said the misuse of the program appeared to be more “opportunistic” than systemic. 

In July, reports suggested as many as 8,000 Australian businesses, including many sole traders, had been notified by the ATO they were ineligible for JobKeeper payments and may need to pay back money to the ATO.

This was before the JobKeeper scheme moved to its second phase at the end of September.

Under the second phase, payments for full-time employees dropped from $1,500 to $1,200, and from $1,500 to $750 for part-time workers. 

The eligibility rules for the program were also tightened, causing many SMEs to no longer qualify for the support.

Examples of wrongdoing

Hirschhorn’s evidence before Senate estimates coincides with the release of updated guidance from the ATO about the types of deliberate errors it is seeing businesses make with JobKeeper applications. 

The ATO says it has seen examples of large businesses incorrectly applying the 30% decline in turnover test to claim payments, when they should have been applying the 50% decline in turnover test. 

Other businesses have attempted to manipulate their sales to change projected GST turnover so they could meet the decline in turnover test, or in other cases, backdated employment relationships to claim more payments. 

Others have failed to pay employees the full JobKeeper amount, says the ATO, while some directors who control multiple businesses have attempted to claim multiple payments for themselves.

In addition to seeking recovered payments, the ATO says it has penalised these business operators and pursued offences for false and misleading statements. 

Areas of focus revealed

This updated guidance from the ATO also sheds light on two new focus areas for its JobKeeper compliance, which relate to the new requirements of JobKeeper 2.0.

The tax office says it will be reviewing businesses that it believes have “contrived eligibility” for the second phase of the JobKeeper program by “manipulating their GST turnover to meet the actual decline in turnover test”. 

It is also particularly concerned about businesses that have incorrectly claimed the higher-tier payment rate for employees, eligible business participants or religious practitioners, when those people are only eligible for the lower-tier rate. 

These new areas of focus are in addition to existing areas of concern flagged by the ATO, including businesses that do not meet the turnover tests, are not paying their employees the full JobKeeper amounts, or making false claims about employees, including by disguising business participants as employees. 

Further details about these new areas of focus, including examples, are available from the ATO website here.