The auditor general has identified “shortcomings” in compliance checks for the jobkeeper program, including in relation to one company deemed eligible and pocketing $360,000 despite more than doubling its revenue, but found the Australian Taxation Office was effective in its delivery of the jobkeeper program.
The audit of the the $89bn wage subsidy program raised compliance issues including accepting companies’ assertions about how they calculated turnover and in 15 cases failing to obtain evidence the subsidies had been paid to employees.
The $1,500 fortnightly wage subsidy was created in April 2020 to support employees through Covid lockdowns, before it was restructured in September 2020 and phased out in March 2021.
The ATO has said that 95% of companies claiming jobkeeper it had audited were eligible, but the program’s lax rules made it controversial.The jobkeeper program required businesses to estimate whether their turnover would decrease by 30-50%, depending on their size, but did not require companies to repay money if they ultimately outperformed expectations.
Eligible businesses that ultimately increased turnover were paid $13.8bn and the ATO forgave $180m paid to ineligible businesses due to their “honest mistakes” in claiming the subsidy.
The Australian National Audit Office report, released on Monday, found the ATO’s implementation of the program effective “except for shortcomings in implementation across parts of the … compliance program”.
The report made no recommendations to the ATO or the Treasury department for improvements to their processes.
But the ANAO noted the ATO failed to ask businesses claiming the payment which turnover test they had used to qualify.
Although the ATO told businesses the projected decline in turnover “needed to be a reasonable assessment of what was likely at the point in time” an entity calculated it, the ANAO found it “generally” accepted assertions about how it was calculated “and did not seek to verify the responses provided”.
The ANAO suggested it could have requested primary documents, such as emails or board papers.
“This reduced the intended assurance that entities had completed their decline in turnover projection before they submitted their application.”
In a sample of 30 companies the ATO believed were eligible for the program, the ANAO found one case of a company which projected a decline of 50% in revenue only to record a 152% increase.
The company was categorised as “low consequences” because it had fewer than 25 employees. The ATO sent it a “nudge email” encouraging it to review its eligibility, but when no response was received it was allowed to keep jobkeeper – a “potential overpayment” of up to $360,000.
The ANAO found that out of 49 compliance cases involving questions over whether the employer passed jobkeeper payments on to their employees, in 15 the case was closed “without evidence that the risk … had been addressed”.
The ANAO said it was “unable to conclude” whether other compliance checks such as employee verification and residency status were completed as intended.
It also concluded that “a more structured approach for documenting the reasons for exercising discretion on jobkeeper overpayments would have provided more transparency and accountability for the use of public funds”.
The ATO recognised that finding but noted “the actual environment required rapid implementation while balancing the need to support the community in a time of great uncertainty”.
The ATO said it was a “challenge” to deliver a “program of the scale and complexity of jobkeeper under exceptional circumstances and in very tight timeframes”.
