JobSaver Fraud: Is Possession Still Nine Tenths of the Law?

On the 30th of March 2020, the Federal Government announced the JobKeeper support subsidy. This wage subsidy was supposed to be paid by the Government to businesses that were significantly impacted by the Coronavirus. With the recent spread of the Delta variant of COVID-19, Australia was forced back into lockdown, many business reapplied for the second iteration – JobSaver. Following a spate of alleged uncovered scams, such as Harvey Norman claiming over $22 million while increasing its profits, the Australian Taxation Office (ATO) and Senate have engaged in debate about prosecutions and claw-backs.

Commissioner of Taxation Chris Jordan said that the ATO had identified $470 million in overpayments. Of that $470 million, the ATO has recovered $194 million so far, and it is pursuing a further $89 million, while $6 million is still in dispute. The ATO has made the decision not to pursue the remaining $180 million, mostly from small businesses, because employers had claimed the wage subsidy in good faith.

Why didn’t the Federal Government just wait for businesses to confirm their losses and pay them back after the fact? Put bluntly, it took them too long to figure the system out to begin with, then too long to implement it as it was, with the fate of the small business economy hanging by a fine thread in the meantime. What ended up happening, at least for the bulk of that $180 million, was a SME sector that was confused and in desperate need.

Data out of the Parliamentary Budget Office suggests more than $13 billion in JobKeeper payments were given to businesses (all sizes, not just those under $10 million in turnover) that recorded increases in revenue. Which contradicts what is being told to us by the ATO. The PBO shows that firms with more than $10 million in turnover received about $6.2 billion – or just over 22% – of the estimated $28.8 billion paid to firms that did not experience a 30% or 50% downturn, according to the report by Ownership Matters. In essence, the JobKeeper program that was designed to help small businesses struggling during the COVID-19 pandemic actually helped large businesses with far greater turnover.

Last Friday (15 October 2021), Commissioner Jordan and Jeremy Hirschhorn appeared before the Senate Economics Committee to answer questions about the ATO’s administration of the JobKeeper scheme. According to Jordan, the ATO found more than 95% of entities were eligible. He said they looked at more than 1,600 SMEs and 480 large businesses and confirmed, 75 businesses had approached the ATO to voluntarily repay JobKeeper amounts, and of those, 62 have already repaid $203 million. He also declared 97% of entities that received JobKeeper were SMEs with a turnover of less than $250 million – however no clear definition of ‘small and medium businesses’ was provided nor is there a single definition of small business in the legislation.

Mr Jordan’s figures were also different to figures provided later in the hearing by Treasury deputy secretary Jenny Wilkinson

Senator Patrick last month moved a motion for the ATO to publish all businesses receiving JobKeeper. Mr Jordan refused, claiming tax secrecy laws prevented him from sharing the information demanded by the Senate. He also claimed public interest immunity in not producing the information. Senator Patrick has previously warned the ATO boss that, by defying a Senate order, he leaves himself open to the potential fines and / or imprisonment.

Treasure Josh Frydenberg has also lodged a Government claim for public interest immunity. He said that publishing the details of private firms would “undermine public confidence” in tax law and administration. The Treasurer has not forced companies that complied with the scheme and made big profits to repay the money.

At the same time though, they seem to have been comfortable enough to use the information to selectively prosecute some, then even publicise it on their own website, such as Raed Saleh. This would appear to be at odds with the claims now being used as a shield.

There has also been a lot of pressure from the Labor party with MP Andrew Leigh and other politicians criticising the Government providing taxpayer subsidies to go to companies that made big profits, including foreign-owned companies.

Why is all this important for small business owners? Well it’s important because as previously mentioned, the ATO intends to pursue overpayments. The Senate, however, has other plans, so the debate continues. There is also a difference between having broken the law and still being liable to prosecution at will, such as in the case of Mr. Saleh, vs having an active mandate to pursue everyone on a blanket basis, meaning the risk for dodgy claimers remains either way, just to varying degrees.

If you have any concerns about where you or your business stands regarding the above – please feel free to reach out to us to see what options are available to you.

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