Written by Jerome Tse and Michael Evans.
On 2 September 2021, the Federal Parliament passed legislation to require listed entities to provide a notice to their market operator containing certain details about payments they (or any of their subsidiaries) received under the Federal Government's JobKeeper program.
The notices will be released publicly by the relevant market operator, as well as be compiled into a consolidated report to be issued by the Australian Securities and Investments Commission (ASIC).
The relevant legislation, initially proposed as an amendment to the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021 (the Bill) by One Nation in the Senate, comes after increasing pressure on both the Federal Government and the Australian Taxation Office (ATO) to disclose more information about the recipients of JobKeeper payments.
While the new requirements apply only to listed entities and their subsidiaries, the legislation signals a stronger focus on governments attempting to manage their fiscal positions, which have been significantly impacted by the range of COVID stimulus measures adopted over the course of 2020 and 2021. This, in turn, will mean a greater focus on reviewing the eligibility of the recipients of such stimulus measures. It has never been more important for entities to develop and maintain proper governance frameworks and ensure adequate resourcing of in-house tax and finance functions to manage business and reputational risks in an ever-changing global tax environment.
Who is required to lodge a JobKeeper notice?
A listed entity must lodge a notice to its market operator if it, or one of its subsidiaries, received a JobKeeper payment in a financial year.
The term "subsidiary" adopts the meaning contained in the Corporations Act 2001 (Cth). In this respect, the requirement of a listed entity to lodge a JobKeeper notice also covers another entity which received JobKeeper, where the listed entity directly or indirectly:
- controls the composition of that other entity's board;
- controls more than 50% of the maximum number of votes that might be cast at a general meeting of that other entity; or
- holds more than 50% of the issued share capital of the other entity.
A notice is required to be given for each financial year in which a JobKeeper payment was received.
Failure to lodge a notice is an offence of strict liability, attracting a penalty of 60 penalty units (i.e. $13,320).
What details are required to be included in the notice?
The notice must set out the following information for the financial year:
- the listed entity's name and ABN;
- the number of individuals for whom the listed entity (or its subsidiaries) received a JobKeeper payment for a JobKeeper fortnight that ended in the financial year;
- the sum of all JobKeeper payments the listed entity (and its subsidiaries) received for JobKeeper fortnights that ended in the financial year;
- whether or not the listed entity or its subsidiaries have made voluntary repayments (whether or not in the financial year) of any JobKeeper payments; and
- the sum of any voluntary repayments.
However, because the new disclosure requirements were non-Government amendments to the Bill, there is currently uncertainty about the form requirements of the notices to be lodged by listed entities.
When do notices have to be lodged?
The notice must be given:
- if the listed entity has lodged its report for the financial year with ASIC on or before the day after which the Bill receives Royal Assent, within 60 days after that day; or
- otherwise, within 60 days after the listed entity lodges its report for the financial year with ASIC.
The Bill received Royal Assent on 13 September 2021. Listed entities which have lodged their annual reports therefore have 60 days from 14 September 2021 to lodge a JobKeeper notice if required.
In addition, if the entity becomes aware that its lodged notice is not correct, it must re-lodge a corrected notice within 60 days of becoming aware of the error. Failure to comply with this requirement is also an offence of strict liability, attracting a penalty of 60 penalty units (i.e. $13,320).
Strategic considerations
These new reporting requirements are indicative of the current political climate with respect to COVID stimulus programs generally. As has been evidenced by several high-profile recipients of JobKeeper in the media recently, there is a high degree of reputational risk at stake.
In respect of this latest legislative measure, three pressure points exist.
The first concerns whether a business was eligible for JobKeeper in the first place. It is therefore important for all recipients of JobKeeper (and indeed any Federal or State stimulus program) to be conscious of, and revisit, their eligibility for those programs.
Secondly, even where entities have met the eligibility criteria for the programs, there is significant community and political pressure to repay amounts received, especially where those entities have experienced increased revenues and/or profits during the intervening period. In this context, these new JobKeeper reporting requirements come after increasing pressure on both the Federal Government and the ATO to disclose more information about the recipients of JobKeeper payments. They also sit in the broader context of the OECD and other economists raising concerns about Australia's current tax revenue position vis a vis its growing debt, both at a Federal and State level.
With the benefit of hindsight, many businesses have already opted to "refund" JobKeeper payments, ostensibly on the basis that actual business results were better than originally forecast and also better than were envisaged when applying the JobKeeper eligibility tests. Businesses, particularly those that are primarily consumer facing, also encountered significant community pressure to repay JobKeeper. If listed entities are considering making "refunds", they may wish to do so before finalising their notices to ensure that such refunds are captured in the notices that must be lodged with their market operator.
For businesses that may strategically choose to "refund" JobKeeper stimulus payments, it is important to note that the JobKeeper rules did not contain a recoupment mechanism. This was a function of the Federal Government recognising the need, at the start of the pandemic in March 2020, to quickly implement a broad-based, national stimulus program designed to keep as many people employed as possible. Nevertheless, the ATO has now established a process to make voluntary "refunds" by entities requesting a special Payment Reference Number. The ATO has also indicated that it will not apply compliance resources if businesses act in good faith to determine whether "refunds" are deductible if they had treated the original receipts as assessable.
The third pressure point concerns internal resourcing. COVID-19 measures, including multiple lockdowns, have had a significant impact on employee well-being. This is particularly so for stretched tax and finance functions within listed groups. The ever-changing requirements with respect to government stimulus programs created significant and unexpected pressure on tax professionals, especially those in-house who are managing their business' participation in the relevant programs. For example, several rounds of amendments were made to the JobKeeper program in its first months of operation, usually on Friday nights, so that the program operated as intended. The amendments placed significant pressure on tax and finance departments due to the processes involved in ensuring JobKeeper requirements were satisfied. Other stimulus programs have not been immune to such issues and continue the pressure on in-house functions. The recent policy changes with respect to the fortnightly testing requirement of the New South Wales JobSaver program is an example. Whilst this third pressure point may not be technical in nature, good governance includes a focus on employee well-being, and we would encourage businesses to check-in on their tax functions as the pandemic continues.
