The Inspector-General of Taxation and Taxation Ombudsman (IGTO), Karen Payne has released her latest report, which looks at the results of her investigations into the ATO’s administration of JobKeeper enrolment deferral decisions.

“Applying the test of what is ‘fair and reasonable’ is vitally important to provide community confidence in the consistency of outcomes for taxpayers,” said Ms Payne. “This is one of the key conclusions highlighted in the latest IGTO report.”

The report is a summary of the IGTO’s investigations into a body of complaints from taxpayers who requested a deferred enrolment in JobKeeper but were rejected by the Australian Taxation Office (ATO).

Ms Payne noted that JobKeeper enrolment deferrals allow JobKeeper applicants to enrol for JobKeeper retrospectively in certain circumstances and are an important part of the economic support package for all Australian taxpayers during the COVID pandemic from mid 2020.

“Essentially, ATO decisions on JobKeeper enrolment deferral requests should be made in a manner that is consistent with the Commissioner’s instructions to ATO staff – which is set out in practice statement PS LA 2011/15. ATO staff have been required to follow this practice statement since 2011,” she said.

Tax Complaint Investigations

The IGTO has investigated at least 20 taxation complaints (to date). Initially (up until around April 2021), the IGTO investigations did not observe the ATO applying the ‘fair and reasonable threshold’, as set out in the Commissioner of Taxation’s own instructions to staff.

“This is contrary to ATO instructions which have applied since 2011 in all ATO deferral decisions,” said Ms Payne.

Key Findings of IGTO investigations into JobKeeper deferrals

The IGTO investigations observed that the ATO:

  • only granted lodgement deferral of JobKeeper enrolments where there were exceptional circumstances which matched one of the circumstances on a list of ATO-specified circumstances;
  • did not apply the fair and reasonable threshold, despite this threshold being set out in the Commissioner’s instructions to ATO staff (PS LA 2011/15);
  • did not consider the particular facts and circumstances of each case to determine whether lodgement deferral was appropriate; and
  • disseminated guidance materials to staff, including Practice Note 2020/002 and scripting for frontline staff, which confined JobKeeper enrolment deferral approvals to only those cases with circumstances that matched those on an ATO-specified list of circumstances
  • did not allow staff to refer requests to a more senior decision-maker unless the officer considered that the case may fall within that ATO-specified list.
  • Improved decision making post April 2021.

The IGTO noted that the ATO changed its decision in a number of JobKeeper enrolment deferrals as a result of the IGTO complaint investigations which identified that the ATO should apply a ‘fair and reasonable’ test.

Key improvements and outcomes

Since more focused application of the ‘fair and reasonable’ test, the ATO has

  • Overturned its initial decisions in a number of JobKeeper enrolment deferral requests by applying a ‘fair and reasonable’ test, in response to IGTO investigations; and
  • Advised the IGTO in writing and verbally that it is the ‘fair and reasonable threshold’ that should be applied and clarified that the list of ATO-specified circumstances only provide a basis for ATO officers to automatically grant JobKeeper enrolment deferrals

Access the full report

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