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Why the end of JobKeeper will see the tax office crack down on wage subsidy recipients

Australians who received JobKeeper face a hefty bill if they make a mistake on their upcoming tax return.

Monday marked the first day of the wages subsidy scheme ending, a year after the emergency welfare measure was introduced to compensate businesses for the Covid shutdowns.

On Sunday, 980,000 employees working for 370,000 businesses received their last JobKeeper payments. 

This ended $1,000 fortnightly payments for those putting in 20 hours or more a week, with part timers working fewer hours getting $650.

H&R Block director of tax communications Mark Chapman said Australians who received JobKeeper faced a hefty tax penalty if they made a mistake with their tax return.

Australians who received JobKeeper face a hefty bill if they make a mistake on their upcoming tax return. Monday marked the first day of the wages subsidy scheme ending, a year after the emergency welfare measure was introduced to compensate businesses for the Covid shutdowns.  Pictured is a Sydney retail worker in October last year

'Even if you just put the wrong figure for JobKeeper in there, if you underestimated the amount you received because you missed off a few payments, that's going to raise a flag at the ATO,' he told Daily Mail Australia. 

'If you've done the wrong thing, absolutely you should be worried.'

The Australian Taxation Office imposes a 25 per cent penalty, if someone mistakenly underestimated the tax they owed but this increased to 75 per cent for deliberate tax evasion.

During the past year, 3.6million Australian workers have at some stage received JobKeeper payments through their employer.

Australian taxpayers have spent $90billion on JobKeeper, a major factor behind Australia's biggest budget deficit since World War II.

Mr Chapman said this would put more pressure on the tax office with the economy emerging strongly from the Covid recession. 

'Look, I think they are under pressure. They will start to do a bit of work on people's tax returns, where they've disclosed it incorrectly,' he said.

'There's going to be a lot more compliance action generally from the ATO this year.

H&R Block director of tax communications Mark Chapman said Australians who received JobKeeper faced a hefty tax penalty if they made a mistake with their tax return. Pictured are Melbourne diners at the end of 2020

JobKeeper at a glance

JobKeeper debuted as a flat $1,500 a fortnight wage subsidy on March 30, 2020 for businesses that had suffered a 30 per cent plunge in turnover

The payments were tapered to $1,200 on September 28 last year for those working 20 hours or more a week with part-time recipients putting in less time getting $750

The third tranche of the scheme tapered the fortnightly payment to $1,000 a fortnight from January 4 for those working 20 hours or more with the rest getting $650

The $90billion scheme ended on March 28, 2021 

'There is a bit of a requirement from the government to bring in the tax dollars.'

Sole traders who have received JobKeeper since July 1 last year are more at risk of making a mistake as they had to manually calculate the figures for their own salaries.

Part-time workers who received more generous earlier JobKeeper payments, inflating their usual salaries, may get a shock too when they submit their tax return.

This would be the case, especially if they were earning above the tax-free threshold of $18,200. 

'You could find yourself in a position where you're actually paying tax where you've never previously paid tax before so that could become a bit of a nasty shock,' Mr Chapman said.

JobKeeper debuted on March 30 last year, initially as a flat $1,500 fortnightly payment, days after Prime Minister Scott Morrison announced the closure of service businesses to stop the spread of Covid. 

The fortnightly payments were tapered from $1,500 a fortnight to $1,200 from the end of September as the scheme covered 1.5million workers instead of 3.6million under the original design.

Since early January, fortnightly payments have fallen to $1,000 for those putting in 20 hours or more a weeks and $650 for those working less, with the scheme now covering one million workers.  

'Last year, the ATO went quite softly on taxpayers, they didn't do a lot of compliance work partly because they were too busy administering JobKeeper but also, given the state of the economy, it didn't seem to be the right thing to do to go hard after taxpayers,' Mr Chapman said.

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