A joint submission to the Treasury Review of JobKeeper noted that the joint bodies understand that the ATO will begin notifying businesses using JobKeeper that are considered to not have satisfied the entitlement requirements.
The submission was from industry bodies CPA Australia, Chartered Accountants Australia and New Zealand, the Tax Institute, the Institute of Certified Bookkeepers, the Institute of Public Accountants, Tax & Super Australia, the National Tax and Accountants’ Association, the Australian Bookkeepers Association and the Association of Accounting Technicians.
The submission stated that, in some situations, these participants have already received JobKeeper payments and the ATO correspondence indicates such payments will now cease with immediate effect.
Some scenarios businesses may be going through as cited in the submission include:
- New businesses that have commenced from 1 January 2020, and who are not registered for GST or are registered for GST on a quarterly cycle.
- New businesses that have commenced from 1 July 2019 who are registered for GST on an annual cycle.
- Businesses that have not included assessable income in their 2018–19 tax return or provided the ATO with notice of sales or supplies made in the relevant period.
- Businesses who have been registered for GST since 1 July 2019 on a monthly or quarterly basis but have not provided the ATO with notice of sales or supplies made in the relevant period.
The submission also noted there will also be many other new businesses and start-ups who had an active ABN as at 12 March 2020 but did not enrol for business participant JobKeeper payments based on the rules.
Similarly, it said there are new businesses that were in operation as at 12 March 2020 who had made taxable supplies and were reporting PAYG withholding amounts that did not qualify for cash-flow boost payments due to the notice requirements.
“The financial and emotional impact that the ATO JobKeeper payment cessation letters will have on genuine start-up business operators who had already started receiving JobKeeper payments is expected to be substantial,” the submission said.
“Many will complain, with some justification, that the cessation of JobKeeper is driven more by ATO systems than careful consideration of whether genuine business activity is in fact conducted.”
New businesses and start-ups ineligible for cash-flow boost payments
The joint submission also highlighted the lack of access to stimulus measures for new businesses and the restrictive nature of the “notice” in relation to a “tax period” requirement on certain new businesses.
It said those requirements are reflected in the need for the ATO to have been made aware of business activity via income tax or GST reporting systems by 12 March 2020.
“These matters were raised at the [ATO’s National Tax Liaison Group] NTLG meeting on 8 May and similar discussions have occurred at the [ATO’s Tax Practitioner Stewardship Group] TPSG,” the submission said.
“The inequitable JobKeeper and cash-flow boost outcomes for identical businesses starting on the same day simply due to the election of a particular reporting cycle have been noted, yet no policy changes have been forthcoming.”