The Australian Tax Office stopped or identified more than $1 billion in questionable payments under the federal government’s JobKeeper wage subsidy program, saying the level of wrongful claims under the massive scheme was “extremely low”.
Giving evidence at a Senate inquiry into the $88 billion program put in place last year as the country was locked down to prevent the spread of coronavirus, the ATO said it had recovered almost $200 million from business entities wrongly paid JobKeeper.
Tax commissioner Chris Jordan says ATO systems stopped more than $767 million going out to firms that did not qualify for JobKeeper.Credit:Alex Ellinghausen
Under the scheme, businesses initially received $1500 a fortnight per employee to cover the cost of their wages. To qualify, businesses had to say they would suffer at least a 30 per cent fall in turnover.
Figures compiled by the Parliamentary Budget Office in July showed almost $13 billion went to companies that did not satisfy JobKeeper’s criteria in its first three months of operation. Company reports show some of the scheme’s cash has flowed into executive bonuses or increased dividends for shareholders.
Tax commissioner Chris Jordan said more than 1 million eligible businesses employing 3.8 million people had received assistance under JobKeeper.
He said in the vast majority of cases, businesses were eligible but in a small number there had been issues.
The ATO had stopped more than $767 million going out to businesses that had applied for JobKeeper but did not qualify. A review of 114,000 entities that received $12.5 billion found $470 million in overpayments.
Of that $470 million, the Tax Office has recovered $194 million so far and is pursuing $89 million. Another $6 million is in dispute while the ATO has decided against pursuing the remaining $180 million where there has been an “honest mistake”.
So far, 75 businesses have approached the ATO to voluntarily repay JobKeeper. Of those, 62 businesses have repaid $203 million.
Mr Jordan said most of the $180 million it would not pursue had gone to small businesses that had passed on the cash to their employees.
“We have undertaken a comprehensive review of cases that forecast a decline in turnover and found the vast majority of taxpayers undertook the projected decline in turnover test in good faith,” he said.
Tax Office second commissioner Jeremy Hirschhorn confirmed there had been an early discussion about the possible clawback of JobKeeper payments, but the ultimate decision was not one for the ATO to make.
He said the overall scheme had worked well. “The level of mis-claiming in this scheme was extremely low.”
The ATO said 97 per cent of entities that received JobKeeper were small to medium-sized operations with turnover of less than $250 million. About $70 billion of the $88 billion program went to those operations.
Just 0.2 per cent of claimants were large businesses, which received $9 billion. The remaining entities – charities and not-for-profits – received $10 billion.
Treasury deputy secretary Jenny Wilkinson says it was the department’s best professional advice that a clawback scheme would undermine JobKeeper.Credit:Alex Ellinghausen
The Senate is demanding the Tax Office release the names of businesses with turnover of more than $10 million that received JobKeeper, as well as the number of people they employed. Several nations with similar wage subsidy programs have made public the names of recipients.
Treasury deputy secretary Jenny Wilkinson told the committee the issue of whether to claw back JobKeeper payments from businesses had been considered but the department believed there would be economic repercussions.
She said it was felt clawing back money would stop some businesses applying for JobKeeper, adding it would also have dented confidence among firms and possibly held back the recovery out of lockdown.
Pressed by independent senator Rex Patrick about why the department did not support getting money back from companies that increased their turnover during lockdown, Ms Wilkinson said it was ultimately a judgement call.
“It was our best professional advice,” she said.
Labor frontbencher Andrew Leigh said overpayments through JobKeeper were the equivalent of $1300 per household.
“No responsible government would ever have run a scheme that delivered $13 billion to firms with rising revenues,” he said. “Mr Morrison and Mr Frydenberg knew after a few months that billions were sloshing out to firms that didn’t need it, yet they didn’t turn off the spigot.”
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