Tax office tells some sole traders who received jobkeeper they were not entitled to payments

Small business owners who have relied on jobkeeper for income throughout the coronavirus pandemic have had future payments suspended by the tax office and warned they may have to pay back what they have received.

The Australian Taxation Office’s “compliance” checking procedure affects sole traders who started their businesses after 1 January this year.

Affected businesses, many of which have received the $1,500 a fortnight wage subsidy since May, have been sent an email from the ATO within the last week warning that because they “started business on or after 1 January 2020”, their “entity would not have assessable business income” from the 2018-19 financial year, and therefore could not prove the 30% reduction in revenue required to access jobkeeper.

However, the ATO’s website describes how businesses started after 1 January are eligible for jobkeeper, outlining an alternative test for proving a reduction in revenue, by comparing the average monthly turnover in February with turnover in following months.

Since the compliance emails, which have been seen by the Guardian, were sent, affected sole traders have complained on the ATO’s online forum about the threat of having to repay money.

“I would’ve assumed they would’ve written to us by email/post asking for information prior to sending the email saying we’re ineligible,” one user wrote.

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‘This is some kind of Robodebt 2.0’

David Geoffrey Hall started his marketing business on 18 February. With several years’ experience in the arts sector, he planned to work with creative businesses to market events.

After working on a marketing and analytics campaign for his first client in February, he received $700 for the work.

Two weeks after that campaign, the prime minister, Scott Morrison, and state and territory leaders met for what would be the final Coag summit in Sydney, and announced a ban on gatherings of 500 people.

“It was pretty disheartening, hearing about the mass gathering ban on that Friday afternoon,” Hall said. “The writing was on the wall for the arts industry.”

Hall has not received any work since March, meaning his income has dropped by at least 30%, enough to access jobkeeper.

After his accountant advised him he was eligible for jobkeeper, backed up by information on the ATO’s website, he successfully applied for the payment.

Hall received $6,000 in payments covering April and May, before the ATO sent him a text message two weeks ago telling him his jobkeeper application was “being examined”, but that he should “disregard this message if you have already received payment”.

He disregarded the text, but on Monday he received an email from the ATO saying he had been deemed ineligible because there was no assessable income for his business in 2018-19. It warned he would have to repay the $6,000 if he could not prove he had made an “honest mistake”.

“That’s all it said, it was super vague,” Hall said. “There’s no details about when you might have to pay it back.

“I’ve already spent the money surviving through the crisis, on rent and groceries. I have no other income coming in, I don’t know how I’d pay it back.”

Hall is consulting his accountant before taking further action, but noted a description on the ATO’s website of a sample sole trader which he said matches “almost exactly my situation”.

“I’m baffled by this,” Hall said. “I can’t help but feel this is some kind of Robodebt 2.0, like there’s been a data-matching exercise and then automated emails sent out.”

‘I’m having to use my super to get by’

Kate, a Melbourne-based graphic designer who asked that her full name not be used, also started her business in February, and had worked with several clients before inquiries “all fell down” with the introduction of lockdowns.

She has received just one job, for $400, since March, making her eligible for jobkeeper.

She had applied for the jobseeker unemployment benefit, originally as a backup, but cancelled her application after learning she would be eligible for jobkeeper.

Kate said she had received $3,000 in jobkeeper payments for April, but the payments for May, which should have been processed at the beginning of June, had not been transferred into her bank account.

After the ATO sent her the same text message that Hall received, Kate called the ATO, but was told by the operator that she was eligible for jobkeeper, and that they would escalate her case so her income for May could be paid.

Days later, she received the same email from the ATO telling her she was ineligible.

Kate told the Guardian she made several calls to the ATO, each lasting 45 minutes, and each time was told she was eligible, her case would be escalated and she would get a response within 48 hours.

Since she was no clearer on when her next payment would arrive, or whether she would have to repay what she had received, she has accessed the government’s early super withdrawal scheme.

“Every time I call them they say it’ll be 48 hours, 48 hours, 48 hours,” she said.

“Because the ATO kept telling me they’d be in touch, I never reapplied for jobseeker. I thought I was doing the right thing by getting out of the Centrelink system, I didn’t want to be in it. But now I’ve shot myself in the foot, having to use my super to get by.”

During the first phone call to the ATO after being told of her ineligibility, Kate asked about her rights to request a review of her case, but was told the 60-day window to appeal had already elapsed.

“The thing that’s most difficult here is all of the communication, and conflicting information, that the ATO is putting out,” she said. ”

An ATO spokesman told the Guardian it had begun investigating compliance with jobkeeper, and that some recipients would be made to pay back what they had received.

The tax office declined to comment on any specific cases , or on whether eligibility for businesses that started after 1 January had changed.

“We know that the overwhelming majority of Australians are honest and want to see this assistance reach those who need it most,” the spokesman said.

The spokesman encouraged those concerned about their eligibility to contact the ATO, and said “the purpose of the letters was to seek information from the businesses, which the ATO may not be aware of to support their claim to jobkeeper”.

However, the correspondence seen by the Guardian does not clearly request this.