Even though many large companies are under pressure to return JobKeeper’s grants after increasing their profits during the pandemic, it emerged that some independent traders and micro-businesses had not received payments, despite being eligible.
- Tax mediator said ATO should have been lenient with independent traders and micro-businesses who applied late for JobKeeper
- The ATO has let down many other companies for making “honest mistakes”
- ATO denies doing anything wrong
In one case, a legally blind taxpayer mistakenly requested JobSeeker payments through Centrelink instead of requesting JobKeeper, but the tax office did not allow him to reapply, claiming his case was not a circumstance “exceptional” which would allow him to receive the wage subsidy.
In another case, a tax agent informed that the JobKeeper registration notification had been delayed due to the serious illness of a candidate’s family member and lack of staff.
Again, the Australian Taxation Office (ATO) did not allow leniency because the tax agent’s situation did not fall under one of the “specified circumstances” of the ATO.
These are two of 20 cases the Tax Ombudsman investigated and contrast with the ATO’s approach to many other payment ineligible companies, which the agency has forgiven for making mistakes in their JobKeeper applications.
Last week, the ATO told the Senate Economic Committee that $ 180 million of the $ 470 million owed to the agency in unwarranted payments, mostly from small businesses, was never recovered because employers had made “honest mistakes” – they had claimed the JobKeeper wage subsidy “in good faith” and had already passed it on to their employees.
But more than 11,000 people on Centrelink who received COVID support overpayments are forced to repay an estimated $ 32.8 million in debt.
Inspector General of Taxation and Tax Ombudsman Karen Payne said a more lenient approach could have been extended to a small number of sole proprietorships and micro businesses that filed late applications.
“On the one hand, the ATO has been lenient in not prosecuting people who it believes made a genuine mistake and who received JobKeeper,” she said.
“But on the other hand … complaints do come to us.”
Ms Payne said her office had received 20 complaints from taxpayers who requested a postponement of their application to JobKeeper for what she said were valid reasons, but whose requests were rejected by the ATO.
She added that the actual number of taxpayers in the same situation could be much higher, as many were unaware that they could complain to her office when issues like this arose.
“Since 2011, it has always been the order of [agency] personal that if you are considering someone’s late filing request in all tax circumstances, you need to apply a test that is easy, fair and reasonable in the circumstances, ”she explained.
She said the ATO has defined all the criteria and how the staff can go about it.
“But in the JobKeeper applications we investigated, the script had become so narrow that it only allowed late filing or late applications in very limited circumstances,” noted Ms. Payne.
“You have a small business that has no employees, and it’s run by an 81-year-old man and with his elderly wife,” she added, citing an example where the ATO backed down. decision after his office investigates. .
She said the owner of the business was unaware that he was eligible for JobKeeper as an individual entrepreneur.
“And it wasn’t until he spoke with his accountant and was told,” Actually, you’re eligible, “that the request was then made.
“So it wasn’t until they got back to Australia that they were able to actually launch their app.
“Initially, we told them, ‘No, the computer says no.’ But ultimately, the tax office overturned that initial ruling and said, “Yes, fair and reasonable under the circumstances.”
Ms Payne said that while her office had 14 of the 20 cases canceled by the ATO, the number of taxpayers in this situation could be much higher.
“We want to make sure that people in these circumstances are aware that… maybe their claim should be reconsidered,” Ms. Payne said.
ATO says deadline extensions are made “on a case-by-case basis”
ATO Deputy Commissioner Emma Rosenzweig told Ms Payne in a written statement that the ATO rejected the findings of its investigation that ATO staff gave bad advice to taxpayers requesting postponements, although Ms Payne included evidence of this opinion in her findings.
“We are proud of the ATO’s implementation of the government’s COVID-19 stimulus measures, including delivering $ 89 billion in payments to eligible businesses and supporting 3.8 million people through the program. JobKeeper, ”Ms. Rosenzweig said.
“As you know, the granting of additional time is a discretion to be considered in light of the individual facts and circumstances, and exercised when it is just and reasonable to do so in those circumstances.
“This principle has underpinned the ATO approach throughout the life of the JobKeeper program.”
Ms Rosenzweig said the ATO has put in place “various procedures to streamline and expedite decisions for applicants affected by exceptional and unforeseen circumstances”.
“This involved defining those instances where the circumstances were clearly verifiable by the ATO as being just and reasonable to allow additional time for enlistment, allowing ATO officers to make decisions quickly and consistently at first. instance.
“However, the ATO has not restricted or restricted the granting of overtime to those who find themselves in limited exceptional or unforeseen circumstances.
“When requests for additional time did not correspond to a clear circumstance allowing the ATO to streamline decision-making, avenues of escalation and review were available to allow applicants to reconsider their situation.
But Ms Payne said she “struggled to understand” the ATO’s reasoning here.
She said the ATO failed to apply the “just and reasonable threshold”, although that threshold is set out in the Tax Commissioner’s instructions to ATO staff.
“We have evidence in our report how they did not apply the PS LA [law administration practice statements that provide direction to ATO staff on approaches to take in administering the law] correctly, ”she said.
“We have evidence of what’s in the training materials. And we have evidence of what’s in their frontline scripts for staff. And we have evidence of what we have. seen in emails we’ve looked at. And we ‘I have 20 cases.
Ms. Payne’s report made no recommendations for the ATO.
“If we had made a recommendation it would have been, ‘Hey tax office you should update your staff instructions because they seem to misunderstand,” she said.
An earlier separate review by the Inspector General found that the ATO had made errors in determining whether small businesses were eligible for JobKeeper and increased corporate cash flow.
She expressed concern at the time that the ATO’s public guidelines were unclear and warned that companies could miss payments because they did not understand they were eligible.
Meanwhile, the political debate focused on which companies profited but still legally received JobKeeper.
Labor, Greens and Independent Senator Rex Patrick have all called on the federal government to publicly denounce companies that refuse to repay the wage subsidy despite rising income and / or profits during the pandemic.
But Tax Commissioner Chris Jordan and Treasurer Josh Frydenberg have rejected publication of a list of companies with more than $ 10 million in revenue that have received JobKeeper, saying it would violate tax secrecy laws. Both have claimed public interest immunity.
Mr Jordan has been warned that he could face fines and / or jail time for refusing to release the information to the Senate, but said he would await the outcome of the public interest immunity request. from the federal government.