At a glance
By Roman Kaczynski, Director, Accountancy Insurance and Rod Spicer, Associate Director, Accountancy Insurance
The JobKeeper wage subsidy program came to an end on 28 March. According to the Australian Government, the program saved at least 700,000 jobs during the COVID-19 pandemic, subsidising full-time employees at $1000 a fortnight and part-time employees at $650 a fortnight at the end of the program.
Despite the assistance this initiative rendered to many businesses affected by the COVID-19 pandemic, there is concern that its end will prove a setback to unemployment figures.
Business owners and individuals should be mindful that, regardless of the program ending, the Australian Taxation Office (ATO) will still be looking to review those who received payments from the program and, if they find that there is cause for review, they may come knocking on those doors.
Despite the economic strain caused by the pandemic, the unemployment rate fell to 5.8 per cent in March 2021. This was far below estimates of above 7 per cent. Almost 90,000 Australians finding work in the beginning of this year buoyed the figures.
Dr Steven Kennedy, secretary to the Australian Treasury, supported ending the program to avoid warping the labour market and having the government keep non-viable businesses afloat. Kennedy says that the program has done its work in helping support businesses through difficult times.
Although he acknowledges the likely job losses, he says the effect was unlikely to be adverse given the strengthening of the economy over the last two quarters.
Employers are also likely to face new difficulties with the end of JobKeeper, especially in handling terminations. The ATO is on the lookout for employers who may take advantage of final JobKeeper payouts as a substitute for redundancy entitlements.
Business owners are being advised to consult with their accountants on how best to manage the end of the program. The ATO confirmed that at the conclusion of JobKeeper, the program was still supporting 370,000 businesses.
Harley Dale, chief economist at Australian credit reporting agency CreditorWatch, estimates that as many as 8000 businesses are likely to go insolvent by the end of the financial year.
Accounting professionals are being advised to reach out to clients who relied on JobKeeper to help them figure out how to manage post JobKeeper, which could include a business exit plan.
The ATO has historically been very active in reviewing government benefit schemes. The claims team at Accountancy Insurance estimates that JobKeeper audits are likely to continue for the next six to 12 months despite the program ending.
As official audits, reviews, investigations and inquiries of taxpayers’ lodged returns and their taxation affairs in general start to increase in prevalence again, one course of action is to ensure that your accounting firm has a comprehensive tax audit protection solution such as Audit Shield in place.
Audit Shield ensures your professional fees will be covered in the event of ATO and other government revenue authorities’ initiated audit activity with respect to lodged client tax returns and financial compliance obligations. This also includes cover for JobKeeper payment audits and reviews (post payment).
Audit Shield also helps to avoid the awkward conversation concerning additional fees incurred when dealing with government revenue authority-initiated audit activity with your client.
It is a solution based on evolving technology, industry-leading methodology, administration assistance, banking options and mobile apps, all provided by dedicated, local account management.
Audit Shield is a win-win and no net cost solution for your accounting firm and your clients.