We always knew that a Government scheme swiftly distributing cash during a crisis was going to come with equally swift compliance and review measures, particularly when eligibility was self-assessed. Two major Australian Taxation Office (ATO) initiatives are searching out fraud and schemes designed to take advantage of the Government’s Coronavirus Economic Response Package.

Tip lines, tax returns and STP

The tip line, tax returns, and single touch payroll are just a few of the data sources the ATO is using to identify “inappropriate behaviour.” The tip line has already delivered its first target with the very public outing in the Australian Financial Review of The Australian Comfort Group for an alleged scheme to deliberately depress monthly revenue to qualify for up to $11 million in wage subsidies.

Internal emails allegedly from an employee who has also lodged a claim under the Fair Work Act against the manufacturer, appear to demonstrate an internal effort to push invoicing to other periods. The Australian Comfort Group have vehemently denied any wrong-doing.

The ATO has reported receiving intelligence on a number of schemes circulating. (One of which is the withdrawal of money from superannuation and re-contributing it to get a tax deduction) ATO Deputy Commissioner Will Day has advised that these acts are not in the true nature of the measure and severe penalties can be applied to tax avoidance schemes or those found to be breaking the law.

What are the ATO’s targets?

The ATO has made its targets clear. For JobKeeper, these include ensuring that:

  • Entities meet the eligibility requirements in relation to business income
  • Entities are claiming for eligible employees
  • Eligible business participants are correctly making claims
  • Entities are not manipulating their turnover in order to satisfy the decline in turnover test

For the early release of superannuation measure, behaviours attracting ATO attention include:

  • Applying when there is no change to your regular salary, wage, or employment information
  • Artificially arranging your affairs to meet the eligibility criteria
  • Making false statements or fraudulent attempts to meet the eligibility criteria
  • Withdrawing and re-contributing super for a tax advantage – this could not only trigger anti-avoidance rules but also result in additional taxes and impact your eligibility for a super co-contribution.

Where individuals have not met the early access measure’s hardship eligibility criteria, the ATO has stated that fines of up to $12,000 will apply for each false and misleading statement made. The ATO is actively looking for individuals who have utilised the early release measures when they didn’t need it, then recontributing all or part of the super for the purpose of claiming a tax deduction.

For the Cash Flow Boost, the ATO is looking for schemes designed to:

  • Artificially restructure businesses to gain access to the cash flow boost
  • Artificially changing the character of payments to salary or wages to maximise the cash flow boost
  • Inflating reported withholding amounts to maximise the cash flow boost
  • Resurrecting dormant entities or phoenixing
  • Making false statements or fraudulent attempts to create an entitlement.
What if I have made a mistake?

If you believe you’ve made a mistake, don’t panic. If you’ve made a genuine mistake, contact the ATO and they will work with you to remedy it. The ATO have pledged to give you the support you need, without the worry of accruing a debt or getting penalised.

If you’re unsure if you’ve made a mistake, or aren’t sure what you’re eligible for, contact one of our Tax Champions for a free consultation and let one of our experts help you.