Case Study on Successful dealing with the Job Keeper Audit from ATO

The Australian Taxation Office (ATO) has intensified its audit focus, particularly on JobKeeper payments, and debt collection since the beginning of the year. The initial focus is on the job keeper audit.

Key Areas of Focus During Job Keeper Audit

During a JobKeeper audit, the ATO examines various aspects to verify eligibility:

  1. Sales Decline Verification: The ATO scrutinizes whether the business experienced a decline in sales by at least 30%.
  2. Taxable Supply Confirmation: Businesses must demonstrate that they made taxable supplies before the stipulated date of March 2020.
  3. Employee Visa Conditions: The ATO checks the visa status of employees to ensure they meet eligibility criteria, including being full-time or eligible casual employees.

Outcomes of Job Keeper Audit

After conducting a JobKeeper audit, the ATO determines eligibility based on the evidence provided. The outcomes include:

  1. Overpayment Repayment: If found ineligible, the taxpayer must repay any overpayment. No administrative penalty applies if it’s determined to be an honest mistake.
  2. Penalties for Misleading Information: Repayment of overpayment along with administrative penalties if the ATO alleges misleading or fraudulent information.
  3. Eligibility Confirmation: If deemed eligible, businesses can continue receiving JobKeeper payments until the program’s end date.

Case Study: Job Keeper Payment Eligibility Review

WISTax recently assisted a client in the education sector with a JobKeeper eligibility review. Despite experiencing significant trading challenges due to COVID-19, the client had not lodged their prior year’s tax return. We advised them of potential ineligibility due to this factor. However, they were adamant about meeting the 30% sales decline requirement and the visa conditions. With unclear guidance on lodgement status in the enrollment form, they proceeded with the application and received JobKeeper payments, which helped sustain their business during challenging times.

job keeper audit

Responding to ATO Inquiry

In the days following the 2021 New Year, while on holiday with my family, I received a phone call from the Australian Taxation Office (ATO). They requested evidence for a taxpayer’s JobKeeper application, noting that the taxpayer had not lodged prior year tax returns.

As a leading accountant in Inner West Sydney, I promptly cut my holiday short and provided all required information to the ATO. Utilizing negotiation skills, I engaged with the ATO to address the situation.

Outcome of ATO Assessment

The ATO determined that the client was ineligible for JobKeeper, resulting in an overpayment that needed repayment. However, no administrative penalty was imposed. The ATO acknowledged the complexity of the JobKeeper Payment and attributed the error to a genuine misunderstanding of tax law.

Upon receiving the ATO’s decision letter, I reviewed it thoroughly and identified areas of mistakes. Despite facing challenges in securing assistance from tax law firms, I initiated the objection process myself. Researching tax law pertaining to JobKeeper, I quantified the errors made by the ATO and emphasized them in the objection.

Positive Outcome and Client Satisfaction

Following the objection, the ATO acknowledged the client’s genuine mistake. Despite ineligibility, the client was allowed to retain the overpayment, amounting to nearly $20,000. The ATO also acknowledged errors in their initial decision letter.

Client Satisfaction and Moving Forward

Witnessing the relief and happiness of the client and their students was immensely gratifying. As a caring and experienced accountant and tax agent in Inner West Sydney and Adelaide, I’m committed to assisting clients facing ATO audits. If you’re undergoing a tax audit, I’m here to help you navigate the process and achieve the best possible outcome.