After a series of changes to the Jobkeeper Rules and updated guidance from the ATO, there appears now to be some level of certainty on the application of the Rules. The Tax Practitioners Board (TPB) has now issued guidance to tax practitioners in response to a number of frequently asked questions about their obligations under its Code of Professional Conduct (the Code) when assisting clients with the JobKeeper measures.
1. Assisting Clients to Estimate Their Turnover
The Code provides that you must take reasonable care:
- in ascertaining a client’s state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of a client; and
- to ensure that taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client.
The TPB has stated the following in TPB(I) 18/2013 at para 10:
The starting point for determining what is reasonable care is giving appropriate attention to complying with the obligations under a taxation law at a standard that could be expected of a reasonable person, objectively determined. This will involve a registered agent exercising their own professional skills and judgement.
Accordingly, when assisting clients to estimate their turnover for JobKeeper purposes, it is important that you firstly ascertain the relevant circumstances of the client and then apply the Rules at the standard expected for a tax professional.
When applying the tax laws, there is no set formula for what it means to take reasonable care in any given situation. However, it may include you referring to further material to ensure that the tax laws are applied correctly to your client’s circumstances. Such material could include:
- legislation and related extrinsic material (for example, explanatory memoranda to Acts);
- any other guidance material published by the Australian Taxation Office (ATO), including on its website;
- information published or provided by a recognised professional association or other relevant regulatory agency;
- publications, information, advice or commentaries published by other experts, registered agents or specialists;
- another registered agent or a legal practitioner who has the ability and expertise to provide the advice on taxation laws; and
- relevant training material.
We strongly recommend that Accountants who either undertake or assist their clients with the JobKeeper enrolment prepare written support outlining the process they undertook, the facts they considered and apply that to the eligibility tests appropriate for that client in reaching their conclusion.
Whilst the JobKeeper is a stimulus measure to assist employers to retain their staff, as we have stated previously, the use of projections always carries a level of risk and the ATO will be active in their review process.
2. Mistakes in Client’s Turnover Projections
The TPB has stated that where information provided by a client seems credible, 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 enquiry.
However, if the information does not seem credible, or seems inconsistent with a previous statement, further enquiries would be required.
It is important you keep records of the information you relied on and your calculations, as we note above.
3. When Turnover Projection Ends up Being Different to Actual Turnover
The ATO has stated that if, at a later stage, it eventuates that the client’s actual turnover for their test period is greater than the projected turnover, the client does not lose access to JobKeeper payments.
If there is a significant difference between the actual and projected turnover, the ATO may enquire whether the assessment was reasonable.
However, should the TPB become aware that the ATO has made an assessment that the calculation of the projected turnover was not reasonable and you assisted your client in the calculation, the TPB may consider that you have breached the Tax Agent Services Act 2009 and the Code.
4. Client receiving JobKeeper Payments Incorrectly
If it is later determined that your client is ineligible for the JobKeeper Payment, any resulting overpayment may be recovered by the ATO, directly from the client. To ensure that your clients understand that they will be personally liable, you should have in place a written agreement, which will ideally form part of an engagement letter.
The TPB strongly encourages the use of letters of engagement as a means of avoiding uncertainty and misunderstandings and to assist in compliance with the Code.
5. Monthly Business Declarations
Each time you lodge the monthly business declaration on behalf of your client, you are required to first have received a signed declaration in writing from your client. The client declaration must state that:
- they have authorised you to lodge the declaration; and
- the information is true and correct.
When you make the monthly business declaration, you are disclosing your client’s affairs to the ATO, which is considered a third party. Therefore, you must obtain your client’s permission to provide the required information to the ATO.
Your client is required to retain a copy of the declaration for up to five years. It is recommended that you also keep a copy of the declaration as well.