March 28, marked the end of the JobKeeper wage subsidy program that has seen at least 700,000 jobs saved during the pandemic period. JobKeeper enabled employers to pay full-time employees $1,000 a fortnight and part-time employees $650 a fortnight at the end of the program.
However, despite the assistance this initiative has rendered to many businesses affected by the Covid-19 pandemic, the government is worried that its end will prove a setback to unemployment figures. Business owners and individuals should also be mindful that despite the program ending the Australian Taxation Office (ATO) will still be looking to review those that received payments from the program and if they find that there is cause for review, they will not waste any time knocking on those doors.
Despite the economic strain caused by the pandemic, the unemployment rate fell to 5.8% in February 2021 and it maintained that level throughout March 2021. This was far below industry estimates that predicted this figure to be above 7%. Almost 90,000 Australians finding work in the beginning of this year buoyed the figures.
Treasury Secretary Dr Steven Kennedy supported ending the program to avoid warping the labour market and have the government keep non-viable businesses afloat. He said that the program had done its work in helping support businesses through difficult times. Though he acknowledges the likely job losses, he said the effect was unlikely to be adverse given the strengthening of the economy over the last two quarters.
Employers are also likely to face new difficulties with the end of JobKeeper, especially in handling terminations. The ATO is on the lookout for employers who may take advantage of final JobKeeper payouts as a substitute for redundancy entitlements.
Business owners are being advised to consult with their accountants on how best to wind up now that the program is over, what the end to JobKeeper support means and if they can no longer keep their doors open. The ATO confirmed that at the conclusion of JobKeeper, JobKeeper was still supporting 370,000 businesses.
CreditorWatch chief economist Harley Dale estimates that as many as 8,000 businesses are likely to go insolvent by the end of the financial year.
Accounting professionals are being advised to reach out to clients that relied on JobKeeper to help them figure out an exit plan. According to CPA Australia business and investment policy senior manager Gavan Ord, these businesses will require help in understanding how to properly wind down and avoid mistakes that may result in consequences down the line.
The ATO has historically been very active in reviewing government benefit schemes. The Claims team at Accountancy Insurance estimate that JobKeeper audits are likely to continue for the next 6 – 12 months despite the program itself ending.
As official reviews, audits, investigations and inquiries of taxpayers lodged returns and their taxation affairs in general start to increase in prevalence again, the best course of action is to ensure that your accounting firm has a comprehensive tax audit protection solution such as Audit Shield in place.
Audit Shield ensures your professional fees will be covered in the event of ATO and other government revenue authorities’ initiated audit activity with respect to lodged client tax returns and financial compliance obligations. This also includes cover for JobKeeper payment audits and reviews (post payment).
Audit Shield also helps to avoid the awkward conversation concerning additional fees incurred when dealing with government revenue authority initiated audit activity with your client. It is a solution based around evolving technology, best methodology, administration assistance, banking options, and mobile apps. All provided by dedicated, local Account Management.
It’s a win-win and no net-cost solution for your accounting firm and your clients.
Roman Kaczynski & Rod Spicer
Director & Associate Director – Accountancy Insurance