Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

ATO issues 11th hour JobKeeper warning

The ATO has cautioned employers against engaging in a JobKeeper scheme ahead of the $90 billion wage subsidy program ending on Sunday.

Tax&Compliance Jotham Lian 26 March 2021
— 2 minute read

With the Treasury estimating that 150,000 workers could lose their jobs once JobKeeper comes to an end on 28 March, the ATO has warned employers that they could lose access to the wage subsidy payments if they deny workers their redundancy entitlements.

Advertisement
Advertisement

The ATO said it will keep an eye out for schemes where an employee will not receive certain entitlements when the employment ends, such as a redundancy payment, or where wages received by the employee are paid in substitution for payment of entitlements.

Using an example of a fictional business, Wicket’s Sports Emporium, the ATO highlights how an employee had been made redundant in January and had been urged to substitute his entitlement to an eight-week redundancy payment for JobKeeper payments until the end of March.

“In this situation, Wicket’s Sports Emporiums eligibility to those JobKeeper payments may be denied based on there being a contrived scheme,” the ATO said.

“Employees may contact the ATO Tip-off line on 1800 060 062 if they are concerned they are receiving wages funded by JobKeeper in substitution for a payment they would normally expect to receive upon termination.”

‘Develop an exit plan’

With just two days to go before the $90 billion JobKeeper program comes an end, CPA Australia business and investment policy senior manager Gavan Ord believes accountants will have their work cut out for them in assisting distressed clients.

According to the ATO, just over 1 million employees and 370,000 businesses are still supported by the JobKeeper program.

“Businesses that are still reliant on JobKeeper to pay salaries are likely to experience cash flow problems when it comes off,” Mr Ord said.

“They may need assistance from their accountant to work out how best to respond to this challenge. The SME Recovery Loan Scheme could provide a source of external finance if needed. Businesses should speak to their bank about this.”

CreditorWatch chief economist Harley Dale said that while the implications of JobKeeper ending will not be as severe as first anticipated, around 8,000 businesses are still predicted to be insolvent by the end of the financial year.

“The greatest magnitude of uncertainty is that we don’t know how many companies aren’t commercially viable,” Mr Dale said. “These businesses are about to be brought to the fore and recovery never happens in a straight line — watch this space.”

For Mr Ord, he believes accountants should proactively assess their business client’s situation and develop an exit plan with them if needed.

“Accountants should consider reaching out to clients who are still receiving JobKeeper and inquiring whether they may be at risk of insolvent trading,” Mr Ord said.

“If so, it’s vital that the business owner and directors understand the implications (including legal liability) of incurring debts they can’t pay.

“For some businesses, the end of JobKeeper may spell the end of the road. But there may be assets in the business which can be realised so they don’t walk away empty-handed.

“Business clients may not be aware that closing down is not simply a case of shutting their doors and walking away. If they go about it the wrong way, the consequences may follow them for a long time. Encourage them to talk through or develop an exit plan with you.”

ATO issues 11th hour JobKeeper warning
image intro
accountantsdaily logo

The Accountants Daily 30 Under 30 Awards
This prestigious awards ceremony is the benchmark for excellence, recognising the industry’s most distinguished professionals, aged 30 and under across Australia, highlighting their outstanding achievements and dedication within the industry. Register to the waitlist today to be first in line for updates on when tickets to attend become available, visit accountantsdaily30under30.com.au to join the waitlist.

Jotham Lian

Jotham Lian

Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

Tax&Compliance