Don’t use coronavirus JobKeeper subsidy to fund executive bonuses or pretend to

Companies that get COVID-19 support payments such as the JobKeeper wage subsidy while still paying executive bonuses or increasing dividends risk damage to their reputations, the Australian Taxation Office (ATO) has warned.

“There was nothing explicit in the rules for the stimulus measures that required companies to stop paying executive bonuses or from increasing dividends to shareholders, but there was a quick backlash for those companies seen to be exploiting the spirit of the measures,” ATO second commissioner Jeremy Hirschhorn said.

He told finance chiefs at The Australian Financial Review CFO Live conference on Thursday that they needed to “follow the tax law, but also follow the spirit of the law”.

The warning comes after a number of ASX-listed companies were found to have received the JobKeeper wage subsidies and general concerns that executives will walk away with cash handouts despite promises to not pay bonuses during the pandemic.

Australia’s highest-paid civil servant, Australia Post chief executive Christine Holgate, remains eligible for a $277,000 cash reward despite her job and future hanging under a cloud.

Ms Holgate, who is fighting to keep her position at Australia Post after it was revealed she spent nearly $20,000 on luxury watches for executives who secured a financial services deal with a major bank, had in March said executives would “forsake any right to a bonus payment”.

But it is possible Ms Holgate will still be granted the bonus because of a deferred incentive payment from last financial year, which would amount to almost 19 per cent of her fixed salary of about $1.5 million.

Mr Hirschhorn did not comment on specific chief executives. But he said his view that companies should not pay bonuses when they are receiving taxpayer support through the pandemic, is consistent with messages from business and investor groups.

Business Council of Australia chief Jennifer Westacott and shareholder activist group Ownership Matters have been among those warning against bonuses being paid in these circumstances.

Mr Hirschhorn said the community would have little sympathy for companies seen to be wasting taxpayer funds and exploiting tax loopholes.

“The line ‘we follow the tax laws in every country in which we operate’ will play even less well when aggressive tax behaviour spills into the public domain, particularly in times of budget deficit,” he added.

Loss carry-back is for businesses doing it tough, not rorters

Mr Hirschhorn also warned against businesses exploiting more recent measures introduced in the Federal Budget to encourage businesses to invest.

These include allowing full expensing of plant and equipment and bringing forward the ability for businesses to carry back losses…