More than 150,000 businesses in JobKeeper limbo as ATO admits to “reporting error” and exposes $60 billion windfall

More than 150,000 businesses are in JobKeeper limbo, stuck between enrolment and their first monthly declaration ⁠amid new concern many SMEs are struggling to access the program.

The revelations came as Treasury and the Australian Taxation Office (ATO) admitted to a JobKeeper “reporting error” that has caused a massive overestimation in the number of workers currently covered by the program, and exposed earlier Treasury forecasts as drastically off.

In a joint statement on Friday afternoon, the government bodies said about 1,000 businesses had submitted errant enrolment forms that overestimated their eligible employees, often by as much as 1500%.

Tax office second commissioner Jeremy Hirschhorn said the ATO discovered the form errors after cross-referencing declarations — requiring employers to declare the tax file numbers — with enrolment form estimates, which are provided by businesses as a first step to participating in the scheme and carry, evidently, little oversight.

About 500 firms with one eligible worker mistakenly reported they had 1,500 eligible employees — a mix up with the value of fortnightly payments.

“With hindsight, perhaps the form could have been more straightforward,” Hirschhorn said on Friday afternoon.

The ATO did not publicise the exact nature of the remaining 500 errors, but said they were also erroneous estimates of eligible workers.

Due to a secondary declaration process, the errors do not affect actual payments handed out, but they have informed recent estimates used by the government to track JobKeeper uptake and costs.

As a result, Treasury — which forecast in March that JobKeeper would cost $130 billion and cover over six million workers — has revised its estimates and now expects just 3.5 million workers to participate at a cost of only $70 billion.

In political terms, the revision delivers a $60 billion fiscal windfall to the Morrison government and has reignited calls among the Labor opposition for the program to be expanded, particularly to about one million casual workers left out under existing eligibility criteria.

Over the weekend Prime Minister Scott Morrison and Treasurer Josh Frydenberg took responsibility for the reporting error, but held firm against calls to expand JobKeeper.

“What it means is Australians won’t have to borrow as much money,” Morrison claimed on Sunday.

Carnell: 150,00 firms “indicates we haven’t got it right”

Because initial Treasury estimates have been revised so drastically, new questions have arisen about whether many small businesses have had trouble getting into the program, with up to 150,000 firms currently in limbo between enrolment and their first monthly declaration.

Businesses are unable to receive payments until they make their monthly declarations — a process that includes providing turnover estimates and re-confirming eligible workers.

The deadline for April payments is May 30, and the ATO has issued a reminder to enrolled firms to encourage them to make declarations.

Small business ombudsman Kate Carnell says there’s been a communication breakdown between the ATO and the small business community that’s seen eligible firms miss out.

“A very large percentage of businesses have got on with it and got it right,” Carnell says. “But there’s many who have fallen into either not enrolling, or not doing the declarations.”

“It indicates we haven’t got it right.”

As of last Wednesday, 910,055 businesses had enrolled in JobKeeper, while 759,654 had finalised the process by making a subsequent declaration, according to the ATO.

A tax office spokesperson said the 150,000 firms in JobKeeper limbo cover about 600,000 workers, or about 17.4% of workers already receiving payments.

“There could be a number of reasons why some business have enrolled but not completed the employee declaration, such as a change in circumstances, where they may have determined they are no longer eligible,” an ATO spokesperson said.

“We expect a number of businesses may simply not be aware that they need to complete a final step in order to receive their payments, and so we are reminding all eligible employers that if they have enrolled but not yet made their employee declaration, ensure they complete their April declaration by May 31, 2020.”

About 40% of the 150,000 firms stuck between enrollment and declaration are sole traders.

As of last Wednesday about $8.7 billion in payments had been approved under the JobKeeper program, covering about 2.9 million workers, with around 97% of claims processed within three business days, the ATO said.

Treasurer Josh Frydenberg suggested the lower than expected JobKeeper update was a signal the economy was faring better than predicted in March, when Treasury first formulated its forecasts.

“This revision by Treasury is not an invitation to go and spend more. All the money that the government is spending during the coronavirus period is borrowed money,” Frydenberg claimed in an interview with the ABC on Friday.

But the revised estimates also scale down the reported quantum of fiscal stimulus the federal government has thrown into the economy, reigniting calls for an expansion of the JobKeeper program.

Labor leader Anthony Albanese told reporters on Friday the government should extend the now $70 billion wage subsidy package to casual workers.

“They said they couldn’t expand the program because they’d drawn a line in the sand. What we know now is that that sand was, indeed, quicksand,” he said.

In an inexplicable twist, recent estimates of participating employees — derived from those errant enrolment forms — had been broadly tracking along the same lines as Treasury’s initial modelling, spurring reports over the last week that JobKeeper had actually been oversubscribed.

This article was updated on May 25 at 12pm.

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