The Australian Taxation Office (ATO) has become aware of several arrangements that have been used to artificially create entitlements to, and obtain benefits from, the Government’s COVID-19 stimulus measures, and is ‘building on its significant efforts’ to target fraud and such schemes.
The ATO’s priority is that the benefits provided under the Government’s stimulus measures reach those impacted by COVID-19 who need them, and not those who enter into schemes that are designed to take advantage of them.
Particularly, the ATO is on the lookout for arrangements that artificially create an entitlement to, or exploit, JobKeeper, early release of superannuation and the cash flow boost for employers. Further details of these arrangements are below.
The ATO’s compliance efforts are focussed on ensuring that entities meet the eligibility requirements in relation to business income, claims are made in respect of eligible employees, and entities are not manipulating turnover in order to satisfy the ‘decline in turnover test’.
The ATO has also published guidelines warning of the types of JobKeeper schemes that it regards as high risk and are likely to attract its attention.
Early release of superannuation
Behaviours that the ATO are concerned about include applying when there is no change to your regular salary, wage, or employment information, artificially arranging your affairs to meet the eligibility criteria, making false statements or fraudulent attempts to meet the eligibility criteria, and withdrawing and re-contributing superannuation for a tax deduction.
Cash flow boost
Employers will be targeted where they have artificially restructured a business to gain access to the cash flow boost, artificially changed the character of payments to salary and wages to maximise the boost, overstated PAYG withholding amounts, or resurrected dormant entities or engaged in phoenixing.
In light of the above, it is no surprise that the ATO is cracking down on fraudulent activity during the COVID-19 era and using its access to a range of data sources to identify these behaviours.
Not only is the Tax Man watching you, but your fellow community members are as well. In a bid to facilitate compliance and protect honest businesses and the community, the ATO has established a hotline and tip-off form, which can be accessed here, to allow the community to blow the whistle on misconduct.
If you suspect that you may have incorrectly received the benefit of any of the COVID-19 stimulus measures, the ATO has advised that coming forward to make a voluntary disclosure is better than waiting around to be audited.
If you are in doubt on how to proceed, we recommend seeking the advice of a tax professional. Members of the G+T tax team will be happy to assist in this regard.