'Honest mistake': ATO won't pursue small businesses for $180m in overpaid JobKeeper

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The Australian Tax Office announced it will not pursue businesses that took advantage of JobKeeper despite raking in large profits, nor will it ask small businesses to repay $180 million claimed in error.

The ATO revealed that over one million businesses received nearly $89 billion in JobKeeper payments, a wage subsidy introduced by the federal government for businesses that struggled financially at the onset of the coronavirus pandemic.

The Senate Economics Legislation Committee's Inquiry into the Coronavirus Economic Response Package Amendment (Ending JobKeeper Profiteering) Bill 2021 on September 10 revealed that the ATO overpaid $470 million.

small businesses erroneously claimed 180 million in job keeper says ato

It has recovered $194 million to date and is currently pursuing $89 million, of which $6 million is in dispute.

"We have determined not to pursue $180 million, mostly from small businesses, where there have been honest mistakes: usually because the employers claimed it in good faith and passed it on to their employees," the ATO said.

Only 75 businesses have come forward to return their JobKeeper payments; 62 have repaid $203 million.

Further, the tax office said it "has not undertaken analysis of companies that received JobKeeper and have since returned a profit, as the level of profitability was not an eligibility criterion".

"In addition, JobKeeper is determined at an employing entity level and relevant profits are determined at a head company level. Profitability is also typically determined annually, not quarterly or monthly," the ATO said.

The committee did not receive a breakdown of which industries relied most on JobKeeper.

Many large ASX-listed companies that claimed JobSeeker payments have been slammed by the media for largely profiting during the pandemic yet refuse to repay the government.

Federal Minister for Home Affairs Karen Andrews said in a Gold Coast-based radio interview that the legislation doesn't require the repayment of JobKeeper "but I think there's actually a responsibility on many of those businesses now - if they are doing well, they need to do a bit of soul-searching".

JobKeeper was established so that the government could keep employees connected with their workplace and keep businesses afloat during the initial stages of the COVID pandemic, Andrews said.

"That has actually been a very good strategy and many businesses do say that it was only JobKeeper that enabled them to keep trading to the point that they are now; so that was the purpose of it and that's what was achieved. On that basis the money was dispersed. It was never set up so that it would need to be repaid in the event that the businesses did not suffer the downturns that were considered the eligibility criteria in the first instance," she said.

This article first appeared on Financial Standard

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Karren Vergara is a financial journalist with Financial Standard, covering wealth management, including superannuation, banking and financial planning. Prior to becoming a journalist, she was an accountant for more 10 years. She has a diploma in journalism and Bachelor's degree in business, both from UTS.