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The Guardian - AU
The Guardian - AU
National
Paul Karp

ATO won’t pursue $180m in jobkeeper paid to ineligible businesses due to ‘honest mistakes’

ATO commissioner Chris Jordan
ATO commissioner Chris Jordan told a Senate inquiry into jobkeeper that ‘profitability wasn’t a criterion for us’. Photograph: Mick Tsikas/AAP

The Australian Tax Office has opted not to pursue $180m in jobkeeper paid to ineligible businesses due to “honest mistakes” by employers claiming the money.

At a Senate inquiry hearing on Friday, independent senator Rex Patrick said the decision contrasts with the government’s approach to social security recipients, with thousands of individuals asked to pay back money they received during the Covid pandemic.

The latest ATO figures will likely add to criticism about what some say is a double standard on overpayments when it comes to profitable businesses and individuals.

The Senate economics committee is considering a Greens bill to claw back jobkeeper from companies earning more than $50m a year that claimed wage subsidies despite later increasing their revenue.

In an opening statement tabled at the hearing, the ATO revealed it had reviewed the eligibility of 1,600 entities for jobkeeper, including 480 large businesses, and found 95% were eligible.

The ATO said it had stopped more than $767 million being paid through eligibility checks during the scheme, which saw $89bn flow to more than 1m eligible businesses.

“We have identified $470 million in overpayments of which we have recovered $194 million and are pursuing $89 million, with $6 million in dispute; and have determined not to pursue $180 million,” it said.

The $180m was forgiven because it went to mostly “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.

The ATO has has been ordered by the Senate to publish details of companies that increased their revenue as part of a campaign to shame them to pay wage subsidies back. The ATO has resisted, citing the privacy of the companies.

The treasurer, Josh Frydenberg, has repeatedly defended the government’s decision in March 2020 not to require them to pay wage subsidies back.

In August, Guardian Australia revealed nearly 12,000 people had been issued welfare debt notices worth a total of almost $33m due to jobkeeper payments.

People on welfare benefits are required to report their income from other sources to Centrelink, with the information used to calculate how much money they are eligible to receive.

Under its compliance regime, Services Australia staff check the income reported by the person against tax records and other evidence, pursuing debts in the event of overpayment.

Patrick told Guardian Australia the government “seems to be happy to not pursue $180m worth of ineligible payments to businesses but is hell bent on getting $33m back from people who can probably least afford to pay it back”.

“In the big scheme of things … it’s almost unbelievable the government wouldn’t be prepared to waive debts in circumstances where individuals [receiving social security] made honest mistakes,” he said.

In the hearing the ATO commissioner, Chris Jordan, said jobkeeper rules designed by the government provided discretion to be “fair and reasonable with respect to small businesses making honest mistakes”.

Jordan and second commissioner, Jeremy Hirschhorn, explained that companies qualified for jobkeeper based on actual decline in revenue over one month or a projected decline with a “reasonable basis”.

Entities were then entitled to wage subsidies for at least six months before changes to the scheme required them to re-qualify.

Jordan said the ATO “implemented the rules the government formulated” and “profitability wasn’t a criterion for us”.

On Friday the Treasury deputy secretary responsible for jobkeeper, Jenny Wilkinson, ostensibly backed Frydenberg’s position that a clawback mechanism was considered inappropriate because it would make employers less likely to claim the wage subsidies.

But when asked directly if Treasury had recommended a clawback mechanism, Wilkinson repeatedly refused to say if Treasury had called for one in March 2020 despite these concerns.

“We expressed very strongly what our concerns were around a clawback mechanism,” she said.

“In the jobkeeper review [released in July 2020] we were clear about our assessment of the program and consideration of modification, and we didn’t recommend a clawback mechanism.”

Wilkinson said it would be “quite challenging” for businesses to pay back jobkeeper, particularly small and medium businesses, and “could be problematic” for Australia’s economic recovery.

Earlier, the ATO revealed despite there being “no legal obligation” to pay back jobkeeper, some 75 businesses have voluntarily repaid jobkeeper, with $203m already collected from 62 entities.

Last week, Harvey Norman became the latest company to pledge to repay wage subsidies, returning $6m of the estimated total $22m claimed by it and its franchisees.

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