Thinking Tax Edition 9

Roelof van der Merwe

Thinking Tax is an initiative from Crowe to provide you with a short overview of specific tax issues that may affect you or your business, with a focus on practical issues you may face on a day to day basis.

1. Focus areas for JobKeeper reviews

The Australian Tax Office (ATO) can review JobKeeper claims in conjunction with other reviews of your tax affairs so it is very important to have proper documentation to support your business’ eligibility for JobKeeper.

According to the ATO, most businesses have been doing the right thing but in cases where errors or misunderstandings relating to JobKeeper are made, the ATO is treating most of these as honest mistakes and is not necessarily seeking to claw back the JobKeeper subsidy payments.

However, if businesses have taken deliberate actions to create eligibility to take advantage of JobKeeper benefits or have demonstrated inadequate attention to the rules, the ATO is likely to take enforcement action. This may include demanding repayment of JobKeeper overpayments and imposing administrative penalties on inappropriate claims.

Some examples of inappropriate claims include:

  • Large businesses that have applied the 30% decline in turnover test but should have applied the 50% decline in turnover test.
  • Businesses that have manipulated their sales to change their projected GST turnover or retrospectively amended their 2019 business activity statements to meet the decline in turnover test.
  • Businesses that have backdated their employment relationships (e.g. to before 1 March 2020 or before 1 July 2020) to misrepresent employee eligibility to claim more JobKeeper payments.
  • Businesses that have failed to meet the wage condition (e.g. businesses did not pay employees the full JobKeeper amount).
  • Individuals who control multiple businesses and have claimed JobKeeper as an eligible business participant in more than one business.

Under the first JobKeeper, a projected turnover test was used, however, under the current JobKeeper extension, a comparative actual decline in turnover test is applied. It will also be important to keep adequate documentation of hours worked for each employee to ensure the correct tier of JobKeeper payment has been claimed.This could include:

  • Business participant declaration.
  • Payroll data.
  • Time sheets.
  • Attendance records.
  • Employment contracts.
  • Business diaries.

Please contact your Crowe representative if you have any questions regarding your JobKeeper claims.

2. New payment times reporting regime for large businesses

To improve payment times for Australian small businesses, large businesses with annual turnover of more than $100 million are required to publish information biannually on the payment terms they offer to small businesses, effective from 1 January 2021.

Large businesses must provide details of the shortest and longest Standard Payment Periods (SPP) they offer to small businesses. Commonly, payment periods after an invoice is issued can vary from less than 21 days to more than 120 days.

There are significant penalties for large entities that fail to report, however, penalties will only apply from 1 July 2022 allowing a 12-month transition for implementation of the payment times reporting regime.

Contact your Crowe representative so that we can help you transfer seamlessly to the new payment times reporting regime.

Roelof van der Merwe, National Tax Director (Melbourne)

Trevor Pascall, Senior Partner, Tax Advisory (Brisbane)

Chris Heyes, Associate Partner, Tax Advisory (Sydney)