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08 Apr 2021 Member Advocacy

Cash flow boost — response by Senior Advocate, Robyn Jacobson, CTA

A member recently sought assistance on behalf of their client who was denied the cash flow boost due to an inability to evidence business activity before 12 March 2020. The member began acting for the taxpayer in February 2020.

The client, a sole trader, operated a café business which suffered greatly due to the lockdowns in Victoria. The business commenced in September 2019 and opened a bank account in October 2019. The first sales were made in November 2019. These were reported in the December 2019 quarterly BAS which was lodged in April 2020.

In this case, two kinds of financial supplies (opening of the bank account) and sales (supplies reported at G1) were made in a tax period ending before 12 March 2020 (these were all made in the December 2019 quarter), so the issue here was that the ATO was not notified of these supplies until April 2020 following the appointment of our member as his tax agent.

The delayed lodgment of the December 2019 activity statement was explained by the individual being a new business owner, and a self-lodger who did not engage the services of a tax agent or seek professional advice as to his lodgment obligations.

Following the ATO denying the cash flow boost, the taxpayer sought a review, but the ATO confirmed the taxpayer was not eligible for the cash flow boost. An objection was lodged, and the ATO again denied the taxpayer the cash flow boost in a decision on objection.

Following the release of the Inspector-General of Taxation and Taxation Ombudsman’s A Report on aspects of the Australian Taxation Office’s administration of JobKeeper and Boosting Cash Flow Payments for new businesses on 21 December 2020 — which identified an alternative eligibility pathway for certain businesses (in very limited circumstances) for JobKeeper (business participants) and the cash flow boost — the member sought our assistance.

The Tax Institute took the matter to the ATO. The ATO advised us that they would arrange for someone in the cash flow boost team to contact the member.

The member recently provided this feedback:

A review of our client’s cash flow boost entitlement has been completed. The ATO has overturned their original decision and approved the cash flow boost in full for my client. I would like to thank you for your assistance.

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