Many businesses across the nation are breathing a collective sigh of relief as JobKeeper payments roll out. However, the Australian Tax Office has received more than 3,000 anonymous tip-offs about potential JobKeeper rorts and is now reviewing claims Australia-wide.
And while dodgy businesses should be concerned about a review, legitimate businesses also shouldn’t get complacent about facing a possible audit. If the evidence supporting your JobKeeper claim is poor or non-existent, the claim might be delayed or even cancelled.
The starting point for any business enjoying JobKeeper is to have an “audit ready” file on hand in case the ATO comes knocking. The file should go over all the steps and mark off each decision you made and why you made it.
Simply looking at your accounting software and seeing a 30% reduction from one year to the next is not enough to enjoy a claim. If you have seen a fall in revenue you should print your accounting reports to show that your turnover has fallen. Numbers can change in a business’s accounting program for a lot of strange reasons, and under no circumstances should a business owner be staring at their accounting reports in front of an ATO auditor with reports indicating you did not suffer the 30% reduction in revenue.
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If your accounting software tracks every change you have an advantage. Dodgy operators will be changing the dates of invoices to manipulate data, and software often tracks every change. So if you can show that the invoices and money trail in your business has not been manipulated, you have a strong starting position with the Tax Office.
Many JobKeeper claims were based on forecast income, so you should already have evidence that you regularly prepare forecasts. If you have never done a forecast before and you start doing one now (that later proves wrong) you might find it awkward to justify your position. However if you have previously done forecasting, with a reasonable track record of success, you have a strong chance of withstanding a review. And this remains the case even if the forecast later on proved to be a bit too pessimistic.
Look at your business specifically
Some staff are not eligible to claim JobKeeper. They might not have the correct visa, have started recently or they are holding two jobs. If your business has deliberately excluded some of your people from a JobKeeper claim you need to record why they were excluded, because if you miss even one person who is legitimately entitled to a JobKeeper payment, your entire claim for that fortnight fails.
Not all businesses have suffered due to COVID-19. Some have kept on going strong, some are doing OK but not hitting forecast growth targets, and some businesses have had a fall in turnover and then bounced back. If your reported numbers to the ATO have had a big fall and then a big rise straight away it can look suspicious – an outsider might think you just delayed invoices so you qualified for JobKeeper. So the audit file should have reasons why the business turnover came back quickly. It might just be that you had a large sale in April that was delayed five weeks for reasons beyond your control. If that was the case: retain email correspondence about the delay for the invoicing.
Who the ATO will look at is not yet clear, however it has indicated that some industries are less impacted from COVID-19 than others. For example, the business revenue from an aged-care facility would likely have a lower impact from COVID-19 than the revenue from a pub.
Where a business is in an industry that is typically not experiencing a downturn from the pandemic, and that business makes a claim, that business has a high chance of being reviewed.
If you diligently prepared the application for JobKeeper and you keep ongoing evidence about the claim every month, a JobKeeper review should not be a major cause of concern. However it is reasonable to expect that such a large amount of money from the government will come with checks and balances – so getting on the front foot and preparing for an audit is good business practice.