- The ATO has revealed it kicked 6,500 businesses off the government's JobKeeper after their claims were deemed fraudulent or ineligible.
- 8,000 people have been sent letters indicating they may need to repay wage subsidies they have already received.
- As the ATO assigns 3,000 employees to the review process, those numbers could jump higher still – with some warning the audit process itself will cause "major problems" for honest small businesses.
- Visit Business Insider Australia's homepage for more stories.
The Australian Taxation Office (ATO) has got its work cut out for it as it begins auditing the businesses receiving payments from the $70 billion JobKeeper program.
The tax office has already stopped 6,500 business from receiving the $1,500 a fortnight wage subsidy after their claim was deemed either ineligible or fraudulent.
"[We] have an important role to ensure the integrity of the stimulus measures and when we uncover fraud or people seeking to exploit them, we’ll take action, as we know the community would expect us to do," deputy commissioner Will Day said.
"If you've received a benefit as part of the COVID-19 stimulus measures and we discover you are ineligible, you can expect to hear from us. If you think this may apply to you, you should contact us or speak to your tax professional."
Designed to subsidise wages for businesses that have seen their turnover fall, the scheme is supporting some 3.3 million workers across 872,000 plus businesses.
As with the early access to super scheme the ATO also administers, JobKeeper applicants were mostly approved across the board straight away, with the intention of later reviewing their eligibility.
The sheer scale of the program has necessitated the assignment of 3,000 ATO employees to review each business.
"At any particular time, we are reviewing between 2 and 3% of JobKeeper applications," a spokeswoman told ABC News.
The review poses a herculean task for the tax office which relies on participants to self-assess, a model that is far from perfect.
The cost of the JobKeeper program, for example, was eventually revised down by a whopping $60 billion, with Treasury blaming businesses that misreported the size of their workforce.
Last week, Independent Contractors Australia Ken Phillips commended the ATO on the speed with which they set up JobKeeper but warned the audit process would be where it could all come tumbling down.
"They did a spectacular job of putting in place the JobKeeper scheme. This thing could have fallen over quite quickly, and they had extraordinarily short timelines in which to do this," he told the government's standing committee on taxation.
"But, the minute we start dealing with the audit and enforcement area of the ATO, we're dealing with the dark forces, to be dramatic about it. We haven't yet seen the ATO implementing the audit and enforcement areas, and this is, in our view and our experience, where we're going to have very major problems."
Specifically, Phillip took issue with the ATO's role as judge, jury and executioner in its review, potentially stinging honest operators with little avenue for appeal.
"If the ATO do an audit and they believe and form the opinion that you have committed fraud, that is effectively the end of the case; they are the sole arbitrator," he said.
"I am predicting a blow-up of enormous proportions here that is going to cause mayhem, particularly through the small business community."
Around 8,000 businesses have already received a letter from the tax office indicating they may need to repay JobKeeper payments.
For many, it's a debt they can't afford. An independent study of Australian businesses provided to Business Insider Australia found that one in four couldn't pay their taxes and GST upfront last year, largely for cash flow reasons.
To unexpectedly have to pay back months worth of wages during a recession may prove too much.
While the ATO remains of the belief that the "overwhelming majority" of applicants are honest, it now has to wade through $13 billion in payments to find which ones should never have been made.
With hundreds of thousands of businesses left to examine, the ATO has a long way to go yet.