JobKeeper documentation ‘absolutely critical’ in ATO audit
Practitioners have been advised to keep contemporaneous documentation of their calculations and advice around the JobKeeper payment scheme to avoid inevitable audit scrutiny in the near future.
While the ATO has declared that it will take an “understanding and sympathetic” compliance approach when reviewing JobKeeper turnover projections, practitioners have now been urged to document their work as much as possible to cover all the bases when the ATO comes knocking.
“[The payments are going to flow] without much testing going on; in other words, the Tax Office isn’t going to be able to sit there and scrutinise everybody’s JobKeeper application now,” the Tax Institute’s senior tax counsel, Professor Robert Deutsch, said on Accountants Daily Insider.
“What will happen is that some months from now, probably three to six months from now, they will start to look at a number of claims, particularly the larger ones, and start to investigate in a sort of audit way to try to understand if everyone has been doing the right thing, whether there have been people who have been claiming when they shouldn’t be.
“It is very important that taxpayers who are now claiming the JobKeeper payment document exactly what it is that they have worked out that enabled them to confidently say they are entitled to the JobKeeper payment.
“In particular, the turnover issue: How did you establish your turnover for a particular period in 2020? How did you show that the turnover was down 30 per cent on last year?”
The ATO’s recently published LCR 2020/1 has stated that the Tax Office will allow for some tolerance around turnover projection predictions.
Likewise, the Tax Practitioners Board has now confirmed that tax agents will not necessarily be in breach of the Code of Professional Conduct if there is a mistake in their client’s turnover projection.
“Where information provided by a client seems credible (and, for existing clients, is consistent with previous statements) and you have no basis on which to doubt the information supplied, you may discharge your responsibility under the code by accepting the statement provided by the client without further checking,” the TPB said.
“However, if the information does not seem credible or appears to be inconsistent with a previous statement, further enquiries would be required. In this case, taking reasonable care may mean asking questions of your client or examining the client’s records, or both.”
Professor Deutsch believes “coherent and cogent” documentation will be a practitioner’s best defence should the ATO start asking for information.
“Practitioners should be helping clients to do that documentation because that’s really the vital part in this whole jigsaw puzzle — it is being able to say to an auditor six months from now, ‘Here’s a piece of paper that explains the whole thing’,” Professor Deutsch said.
“If it is coherent and cogent, the auditors will probably say, ‘Thank you very much, I’ll take a copy of this’, go away and leave you alone.
“A mistake that a lot of taxpayers make is saying I’ll worry about that when I get there.
“The problem of worrying about it when you get there is that when you get there, you can’t remember much about this because so much has happened in the interim, so document it now.”