The Australian Taxation Office (ATO) plays a pivotal role in administering the Job Keeper and Cash Flow Boost payments – critical economic stimuli introduced by the Australian federal government to support businesses during the COVID-19 pandemic. To ensure efficient management, the ATO has implemented several measures to determine an ineligible job keeper. However, an in-depth analysis of the ATO’s integrity rule reveals its restrictive nature and implications for certain businesses seeking economic relief.
Eligibility Criteria and Integrity Rule
The eligibility criterion for JobKeeper and Cash Flow Boost encompasses the requirement that businesses must have notified the Commissioner of assessable income in the 2018–19 year or made a taxable supply between 1 July 2018 and 12 March 2020. This necessitates lodging the FY2018/19 tax return by the deadline of 12 March 2020. This stringent interpretation creates challenges for new businesses and entities reporting quarterly, rendering them ineligible.
Similarly, businesses established after 1 July 2019, and those reporting GST annually, face hurdles in meeting eligibility criteria, even if they made a supply before 12 March 2020.
Lack of Discretion and Implications
While businesses affected by COVID-19 demonstrate activity prior to 12 March 2020, they may not satisfy legal requirements due to the ATO’s lack of discretion in granting the cash flow boost and JobKeeper. Once the ATO makes a decision, objection and appeal processes offer no recourse.
Inspector-General’s Investigation and Key Findings
The Inspector-General of Taxation and Taxation Ombudsman (IGTO) conducted an investigation into the ATO’s administration of JobKeeper and cash flow boost for new businesses. The IGTO’s findings highlighted significant aspects:
Broader Interpretation of Taxable Supplies: The IGTO’s scrutiny revealed that the definition of taxable supplies was more extensive than accepted by the ATO. Financial supplies, including activities like borrowing money and opening bank accounts, could satisfy this definition.
Alternative Ways of Providing Notice: The IGTO emphasized that notifying the ATO about taxable supplies wasn’t solely confined to business activity statements (BAS) lodgement. Acceptable alternative methods also exist.
ATO’s Response and Moving Forward
The ATO acknowledged that acquisitions and supplies made during a business’s inception could meet the integrity rules. However, the ATO refrained from identifying all potentially affected taxpayers due to feasibility constraints. The ATO is committed to reviewing cases where businesses have previously contested its decisions.
If you’ve encountered hurdles in receiving the Job Keeper payment, or your eligibility has been questioned during a Job Keeper audit, EndureGo Tax is here to assist. As a leading accounting firm specializing in job keeper audits, our experienced professionals in Inner West Sydney can review your case and explore avenues for potential resolution. Feel free to reach out to us at 1800 841 312 to discuss your situation and receive expert guidance. Your pursuit of economic relief is our priority.