• A new report published by the Inspector-General of Taxation and Taxation Ombudsman (IGTO) has found that many new businesses missed out on the JobKeeper subsidy and cash-flow boost despite being broadly eligible.
• The review, published on Monday, found that the Tax Office didn’t provide the businesses with the opportunity to provide evidence to support their claim, and simply found them ‘ineligible’ instead.
• While the ATO has been aware of the issue since August, it has told the IGTO it will only rectify it for those who objected or appealed at the time.
• Visit Business Insider Australia’s homepage for more stories.

After a flood of complaints from Australian businesses, a first of its kind review is seeking to set right one of JobKeeper’s biggest flaws.

On Monday, the Inspector-General of Taxation and Taxation Ombudsman (IGTO) Karen Payne revealed that “most complainants” she heard from this year was to do with the federal government’s $70 billion wage subsidy.

While Payne commended the cornerstone policy, which set out to help ‘resuscitate’ businesses after a national shutdown of the economy, she found that due to the speed with which it was rolled out “matters arose that had an impact on the efficient and fair administration of the tax system”.

Specifically, the IGTO found that many otherwise eligible businesses had both their applications for JobKeeper, as well as the tax-free cash flow boosts of up to $100,000, rejected by the ATO due to a lack of reporting prior to March.

“The IGTO concluded that the ATO did not provide a number of new businesses with an opportunity to provide evidence of having made taxable supplies (within the modified meaning) before it determined that they were ineligible”.

In other words, the report confirms that some Australian businesses were overlooked for government support at a time when they needed it most due to little more than poor implementation. In terms of the JobKeeper subsidy alone, affected businesses missed out on around $20,000 per employee over the first six months of the scheme,

While exact numbers are unknown, the report confirms that more than 9,000 applicants lodged a complaint about their missing out. If that’s any indication, it would suggest hundreds of millions of dollars could have been withheld as Australia’s small business community struggled through the pandemic and subsequent lockdown.

It’s understood the ATO has reversed its ruling on around one-third of those complaints to date, with the tax office responding that they only amount to a small amount of technical errors.

“Even so, they are likely to significantly impact the ATO’s management of disputes and there may be significant consequences for entities adversely impacted by those decisions, including financial and emotional consequences for the businesses, their employees and their families,” Payne said.

For a range of reasons, the JobKeeper scheme has paid out far less than anticipated. The federal government has previously revised down the payouts made initially under JobKeeper from $130 billion to $70 billion, after one particularly large arithmetic error.

Interestingly, the IGTO reveals that the ATO was aware of these newly revealed shortcomings as early as August, before the complaints were even raised with it, and knew “that it would need to review earlier decisions that it made in respect of certain taxpayer circumstances.”

However, business owners who may have missed out shouldn’t expect to be compensated across the board.

“The IGTO also learnt on 23 September 2020 that the ATO did not intend to identify all potentially affected taxpayers. The ATO explained that it considers it is infeasible to identify and approach all affected entities directly or to broadly communicate its changed view in a manner that would not cause disproportionate confusion for others.”

Instead, only businesses which went to the trouble of disputing or appealing their rejection may find their situation duly rectified, although JobKeeper payments cannot be back paid.

Those who missed out but didn’t object to the ruling meanwhile won’t be notified that they’ve been wronged.

Tough luck, in other words.

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