Army and Air Force canteen told not to pay back JobKeeper funds for which it was ineligible

Annual report documents from the Army and Air Force Canteen Service show $927,000 in JobKeeper funds were taken by the government-owned entity, with the Tax Office declaring it would not pursue repayment.

The Canberra Times understands AAFCANS' admission that it took the wage subsidy, implemented to help private employers retain workers during the pandemic, makes it one of the first cases where a government subsidiary claimed payment from the Australian Taxation Office.

"In financial year 2021, AAFCANS recognised $927,000 in revenue received from the ATO," the report says. "This related to JobKeeper payments received in FY20 which AAFCANS were ultimately told by the ATO were ineligible claims."

AAFCANS is a not-for-profit statutory entity which reports to the federal government. The report also says that the ATO dropped its efforts to try to recoup the funds from the canteen following submissions it had put to the Tax Office to not pay back the money.

"During FY2021 after submissions from AAFCANS, the ATO ruled that whilst AAFCANS were not eligible for these funds, they did not require repayment," it stated.

The ATO was contacted for clarification as to why the erroneous payments were not clawed back, however the Tax Office said it did not comment on individual matters. AAFCANS also said it did not comment on ATO issues. The amount of JobKeeper received was only $5125 less than the total amount of wages paid in financial year 2021.

AAFCANS noted the illegitimate funds received would be put towards future capital projects.

Australian businesses were able to apply for JobKeeper if their turnover fell by more than 30 per cent, or if future monthly turnover projections were expected to fall because of COVID lockdowns.

AAFCANS, however, recorded a $1.5 million increase in sales compared to the prior financial year, a rise of 5.2 per cent, and booked a surplus of $1.6 million.

It also reported investments in a new premium coffee blend for defence staff which is locally roasted in Melbourne and would be implemented across its 27 ADF sites.

Labor's assistant shadow treasurer, Fenner MP Andrew Leigh, said it was one of the most "unusual instances" of a JobKeeper payment he had seen.

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"Given veterans are facing long delays to get assistance, and many struggling RSL sub-branches and veteran organisations missed out on JobKeeper, the Morrison government needs to explain why this is the best use of taxpayer money to support the welfare of our defence community," Dr Leigh said.

Public pressure has forced a number of large public companies to repay JobKeeper to the Tax Office, after financial records showed profits rose during the pandemic.

Labor, the Greens and a number of independent MPs have called for the establishment of a transparency index which would unveil which companies took JobKeeper but made profits.

However multiple bills have been voted down by both the House of Representatives and the Senate.

Treasurer Josh Frydenberg has previously argued the scheme was an emergency response to the pandemic to ensure a tidal wave of job shedding across the labour market did not occur.

He has also said the implementation of a transparency index would undermine confidentiality arrangements between private businesses and the ATO.

Parliamentary Budget Office analysis in August showed more than $13 billion in JobKeeper payments went to almost 200,000 businesses which recorded increases in revenue within the first six months of the program's implementation.

Further analysis from the PBO showed $38 billion went to firms which increased revenue over the period.

Treasury said the analysis is flawed and does not take in account the impact the pandemic had on small and medium businesses, which met the eligibility criteria at the time.

The ATO's annual report also showed the Tax Office was not planning on recouping more than one-third of the $470 million in overpayments it had dished out through the scheme.

It also noted $121 million in JobKeeper recoupments had not been received as of June 30.

Veterans' Affairs Minister Andrew Gee was contacted for comment, and referred the matter to the Department of Defence.

The department then said the question should be directly answered by AAFCANS.

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