Late last month, the ATO began sending out letters to 8,000 businesses, warning them that the $1,500 per fortnight wage subsidy would cease because they were considered not to have satisfied the JobKeeper entitlement requirements.
The letters focused on scenarios affecting new businesses and start-ups, particularly where they failed the requirement of notifying the ATO of business activity through a tax return, activity statement or GST return by 12 March 2020.
These scenarios include new businesses that have commenced from 1 July 2019 who are registered for GST on an annual cycle; 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; and 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.
The Institute of Public Accountants general manager of technical policy Tony Greco said he has been fielding plenty of calls around the issue, with practitioners and their clients unhappy with the inequitable outcome based on their reporting cycle.
“Every practice seems to have a few clients caught in this bucket,” Mr Greco told Accountants Daily.
“There will be thousands of businesses who are now coming to terms with not receiving any stimulus and they are not happy and are writing to local MPs.
“Some practitioners have raised objections with the ATO to no avail, so best we can hope for is that the Treasury could incorporate a rule change as part of the upcoming review of JobKeeper.”
A tax practitioner, who requested to remain anonymous, said he had relied on ATO phone advice in April confirming that his clients were eligible for JobKeeper, only to later receive the letter from the ATO advising that they were not because they fell into one of the abovementioned scenarios.
“The Treasurer has made tweaks to the rules but to date has ignored calls to address this issue which seems unfair and inequitable,” Mr Greco said.
With Treasurer Josh Frydenberg set to provide an economic update next Thursday, together with plans for the future of the JobKeeper program, a joint submission by nine professional bodies was provided to the Treasury last month, calling for the restrictive tax period notice requirement to be amended.
They have called for the notice requirement to be amended by importing an assumption that either a monthly or quarterly tax period applies, and to allow the commissioner to use evidence of “making a taxable supply” in those notional tax periods up to 12 March 2020, in order to allow businesses to satisfy eligibility requirements.
The joint submission has also requested that entities that satisfy the amended rules should be able to retrospectively enrol for the JobKeeper payments.