Employers caught up in an alleged fraud ring accused of stealing $165 million can contact the Australian Taxation Office to find out if they will be liable for tax that wasn't paid because it was being siphoned off by a criminal syndicate, the agency says.
And employees and clients of the company at the centre of the alleged fraud, Sydney-based payroll company Plutus Payroll, will not be penalised when the amount reported as being withheld is not actually paid to the ATO.
The ATO on Monday issued a statement aimed at alleviating concerns that innocent parties caught up in the alleged fraud would be penalised.
"Workers will not be penalised when the amount reported as being withheld is not actually paid to the ATO," the agency said.
"At tax time, the amounts withheld from their pay will be applied when their income tax liability is assessed.
"Employers who are concerned whether they have met their tax and super obligations can also find out what they need to do" via the ATO's website (ato.gov.au/support) or through a hotline (1800 060 062).
How the scheme worked
Companies paid money to Plutus on the basis it would be used to pay employees' wages and salaries as well as PAYG contributions to the ATO.
But the Australian Federal Police alleges a percentage of the funds that should have been paid to the ATO was skimmed off by the syndicate and spent on lavish lifestyle expenses.
Former Plutus clients have said that the company's "zero fee" policy enticed more than 6000 contractors and it paid out more than $400 million in wages each year.
"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.
"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 would "continue to update general advice as we get a better understanding of the different scenarios people are in and how we can support those affected".
BDO partner, Mark Molesworth, welcomed the ATO's attempt to "provide help, and therefore comfort, to those who are innocent victims of this matter".
He estimated "workers affected would have to number in the thousands, if not the tens of thousands".
"While the full force of the law should be brought to bear on those who are found to have broken it, it is BDO's view that workers and employers who have used payroll services in good faith should not be penalised," he said.
"This appears to underpin the ATO's response. We hope that it is followed through in reality."
He said some form of regulation of the industry was needed.
It was still unclear how employee entitlements, such as PAYG, withholding tax and superannuation contributions which were paid to the payroll services provider but not forwarded to the appropriate recipient, will be dealt with.
"Employers are therefore still in jeopardy of having to pay these amounts twice - simply because they trusted the wrong people," Mr Molesworth said.
"This is a salutary lesson to those businesses using payroll service providers - I would expect that many businesses will be asking some hard questions of their providers and expecting much greater levels of transparency from them."
Melbourne barrister Chris Wallis questioned "whether it is appropriate to treat employers, who received cash and other soft benefit inducements from Plutus to recommend Plutus, as 'victims' requires careful consideration of the particular circumstances".
Government departments hit
Plutus had also contracted to government departments. Australian Services Union tax branch secretary Jeff Lapidos said the government should have maintained its own payroll functions in its departments.
"Not doing so has made this debacle to be even worse," he said.
Mr Lapidos said "significant weakness in the ATO's data matching systems" had been exposed.
"The ATO does not match all employer payroll summaries against individuals' tax returns," he said.
"Perhaps the alleged criminal syndicate was aware of this.
"The ATO needs to be properly funded so these, and other weaknesses in its compliance systems, can be corrected."
Last week acting ATO boss Andrew Mills told staff the integrity of the agency had taken a hit following charges against Deputy Commissioner Michael Cranston who allegedly abused his position as a public official after he accessed an audit into his son Adam Cranston.
Mr Cranston allegedly sought to pressure colleagues to cut a deal with his son after he learnt Adam was the subject of a major tax fraud investigation.
Tax Commissioner Chris Jordan who is believed to have been on sick leave while news of the alleged tax fraud broke, will front Senate estimates tomorrow.