Plutus Payroll IT contractors get ATO help over missing tax

IT contractors caught up in Plutus Payroll's legal wrangles will not be penalised over PAYG tax discrepancies

Australian IT contractors that had their wages interrupted when Plutus Payroll became embroiled in a $165 million tax fraud investigation are set to get a break from the Australian Taxation Office (ATO).

The outsourced payroll management service company left hundreds of IT contractors around the country without wages for weeks after its accounts were frozen by the Australian Taxation Office (ATO) in late April.

It was subsequently named as the company allegedly at the centre of what has been described as the largest tax fraud investigation by the Australian Federal Police (AFP) in the country’s history.

While the ATO ultimately agreed to allow the release of wages owed to the affected contractors, it remains to be seen whether contractors on Plutus Payroll’s books will receive all of their entitlements, even if they do receive all the wages owed to them.

Further, the scam allegedly involved the siphoning of contractors' PAYG tax payments, with only part of workers' tax obligations being paid to the ATO - leaving affected individuals with a discrepancy between their taxation obligations and the actual amount of tax paid on their behalf.

On 29 May, Australia’s tax collector issued initial guidance to assist taxpayers who were affected by the alleged actions of payroll services companies currently under the joint AFP and ATO investigation, named Operation Elbrus.

Under the guidance, workers that had been on Plutus Payrolls’ books will not be penalised when their pay as you go tax withholding (PAYGW) amount reported as being withheld is not actually paid to the ATO.

At tax time, the amounts withheld from applicable contractors’ pay will be applied when their income tax liability is assessed. The guidance includes information on what workers need to do to lodge their 2016-17 tax return, as well as how to check their superannuation entitlements.

“We hope this general advice will provide certainty to workers and employers who have used the services of payroll company Plutus Payroll Australia Pty Ltd and associated entities, and may be seeking guidance regarding PAYGW status, to ensure their tax obligations are met,” the ATO said in a statement issued on 29 May.

Employers who are concerned whether they have met their tax and super obligations can also find out what they need to do under the new ATO guidance.

“We understand that sometimes workers and employers are affected by circumstances outside their control and we are implementing a range of support measures to ensure that you have clarity on your circumstances,” the ATO said.

The ATO has set up a dedicated website for those affected. IT contractors on Plutus Payroll’s books can find more details here.

The ATO guidance comes just weeks after the AFP arrested and charged 10 people for their association with a syndicate allegedly responsible for the $165 million tax fraud against the Australian Government.

At least six people were charged with conspiracy to defraud the Commonwealth for their alleged role in the syndicate, while two men were charged with money laundering offences.

Among those charged was Plutus Payroll’s alleged former director, Simon Anquetil, who was arrested following his return to Australia 18 May

Anquetil has been charged by the AFP with conspiracy to defraud. The maximum penalty for this offence is 10 years imprisonment.

It has since emerged that Anquetil reportedly engaged in phoenix activity and alleged fraud during his time at his former IT company, EStrategy Group.