JobKeeper: Decision in Apted and FC of T

A number of taxpayers will be interested in the outcome of the appeal to the Full Federal Court of the AAT’s decision in Apted and Federal Commissioner of Taxation [2020] AATA 5139.

The ATO confirmed on 18 January 2021 in an interim Decision Impact Statement that, while the appeal outcome is pending, the ATO will manage cases affected by the AAT’s decision (including those for which an objection against an adverse decision to deny JobKeeper or the cash flow boost has been lodged with the ATO) as follows:

• where an entity’s eligibility can be resolved in a manner favourable to them — for example, where an entity did not have an ABN on 12 March 2020 but the Commissioner determines that the entity’s circumstances fall within the approach contemplated in PS LA 2020/1 — the ATO will continue to resolve these matters and progress as normal to finality;
• where an entity is ineligible for other reasons unaffected by the Apted decision — for example, the entity does not meet one or more of the other eligibility criteria — the ATO will determine ineligibility based on those other reasons;
• with the client’s agreement, postpone finalising decisions regarding eligibility for JobKeeper payments in circumstances where the ATO determines the entity does not satisfy the eligibility criteria but considers they might become eligible depending on the views of the Full Federal Court on the issues in this case; and
• if an entity would like the ATO to make a decision while the appeal is pending, the ATO will do so in line with the current ATO view set out in PS LA 2020/1.

The ‘12 March 2020 ABN requirement’ for JobKeeper exists only for eligibility based on business participation (and not paid employees). The ATO is taking a similar position in regard to eligibility for the cash flow boost given the same ‘12 March 2020 ABN requirement’ exists for eligibility for all employers for the cash flow boost. The AAT’s decision has not changed the need to satisfy all other eligibility conditions.

So what should taxpayers be thinking about when deciding next steps?

While the appeal is pending, there are a number of matters which affected taxpayers should consider so they can make informed decisions about their next steps in an objection, review or appeal process.

Taxpayers need to consider the certainty of their rights, and time limits which apply to taking certain courses of action. Extensions to these time limits can be sought but taxpayers need to consider the merit of seeking an extension, and the timing of when such action should be taken.

Some taxpayers may be keen for their outstanding matter to be resolved. However, if the outcome relates to the issues on appeal, it would not be appropriate for the ATO to make pre-emptive decisions on those matters while the appeal outcome is pending. It is important that taxpayers have certainty as efficiently as possible, so that is why the ATO has sought for the hearing to be expedited through the courts. The ATO will be continually updating the status of the appeal on their website and the ATO has confirmed to us that they will be contacting affected taxpayers.

Time limits for lodging objections and seeking reviews/appeals of decisions on objection

Summary of time limits

The table below sets out the time limits relating to:

• lodging objections against a decision by the ATO to deny JobKeeper or the cash flow boost; and
• seeking a review of, or appealing, a decision on objection.

Not yet lodged objection

Request for decision on eligibility for JobKeeper or cash flow boost

If a taxpayer does not wish for their matter to be postponed, they can request for the Commissioner to make a decision (being an original decision) on the taxpayer’s eligibility for JobKeeper or the cash flow boost. However, taxpayers should be aware that if they request that a decision be made, the decision will likely be unfavourable as it will be made on the basis of the ATO’s current view as set out in PS LA 2020/1 (not the view of the AAT in the Apted decision).

Taxpayers have objection and review rights to an unfavourable decision. How the ATO will manage an objection or review of a decision is discussed below.

Time limit for lodging objection

A taxpayer has 60 days from the date on which a decision is made that the entity is not entitled to JobKeeper or the cash flow boost to lodge an objection.

Given that no assessment notice is issued for JobKeeper or the cash flow boost, this raises an interesting question as to when the decision is made to deny the entity a JobKeeper payment or the cash flow boost. The ATO’s view is that a decision is only made when once the Commissioner has turned their mind to the entity’s circumstances, and the Commissioner has decided that entity is not entitled to a stimulus payment — in part or full — for a particular period. In a practical sense, where the Commissioner has made a decision, a written decision should have been provided that clearly sets out that it is a reviewable decision, along with the entity’s review rights.

Regardless, given the conclusion of the cash flow boost scheme and the passage of time that has passed since most entities would have sought JobKeeper assistance, it would be likely that many entities have exceeded the 60-day period within which an objection could be lodged.

However, the ATO has discretion to allow taxpayers to lodge an objection out of time. The circumstances in which the ATO will exercise discretion to treat a late objection as if it had been lodged within the time limit are set out in PS LA 2003/7.

The Commissioner will look favourably on a request for an extension of time to lodge an objection in circumstances where a lead case is before the Courts. Paragraph 1 of PS LA 2003/7 explains in its overarching principles that:

As a general rule, requests for extension of time are to be approached on the basis that extensions will be granted, unless there are exceptional circumstances.

Lodged objection but not yet received decision on objection

The ATO has advised in its interim Decision Impact Statement that where the resolution of the case solely turns on the outcome of the Apted appeal, with the agreement of the entity, the ATO will postpone finalising those cases until a final court decision has been made.

Request for decision on objection under section 14ZYA

Where an objection has been lodged and more than 60 days has elapsed from lodgment of the objection, a taxpayer can request for the Commissioner to make a decision on objection under section 14ZYA of the Taxation Administration Act 1953. A section 14ZYA notice provides the Commissioner with 60 days from receipt of the notice to make a decision on objection or the objection will be deemed to be disallowed.

Taxpayers should be aware that if they request that a decision on objection be made, again, the ATO has advised that the decision on objection will likely be unfavourable for the reason explained above.

It is important that taxpayers who have lodged an objection, and subsequently make contact with the ATO, do not inadvertently compel the Commissioner under section 14ZYA to make a decision on objection, particularly while the Apted appeal is pending.

The ATO has advised that it is not always obvious that a request under section 14ZYA has been made to the Commissioner, so where a written notice is received from a taxpayer, the ATO will confirm with the taxpayer that they intended to request a decision on objection under section 14ZYA.

Seek review of decision by AAT or appeal decision to the Federal Court

A taxpayer who is dissatisfied with a decision on an objection can seek a review of the decision by the AAT or appeal the decision to the Federal Court. The application to the AAT or the Federal Court must be lodged within 60 days of the date of the notice advising of the decision on objection.

Alternatively, under the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act), the Federal Circuit Court of Australia and the Federal Court of Australia. Requests for reviews under the ADJR Act must be lodged within 28 days of the original decision to not exercise discretion.

If the time limit for applying for a review of a decision by the AAT has expired, an application can be made to the AAT to extend the time to lodge your application for the review. Further information on applying for an extension of time is available from the AAT website. Similarly, extensions of time can be sought for appeals to the Federal Court.

Taxpayers should consider obtaining appropriate professional/legal advice in deciding whether to seek a review of or appeal a decision while the Apted matter is being resolved. Such litigation is costly for all parties, and the AAT or Federal Court may hold off making a decision in any case pending the outcome of Apted.

Further guidance and information

We will provide further guidance and information as it becomes available. If you have any specific concerns that have not been outlined above, please email taxpolicy@taxinstitute.com.au.