Publication date: 26 Mar 21 |
Source: THE TAX INSTITUTE
SYDNEY, Thursday 4 March 2021: The Tax Institute is working with members and the ATO to secure the correct outcomes for businesses that may have wrongly missed out on COVID-19 stimulus payments last year. An Inspector-General of Taxation and Taxation Ombudsman (IGTO) report identified that a small group of JobKeeper and cash flow boost applicants were denied access to stimulus support due to an oversight regarding how an entity can evidence its business activity prior to 12 March 2020[i]*.
“The good news is, overall, this is an issue that affects only a small number of applicants. Amid more than six and a half million applications for COVID-19 stimulus support**, based on the numbers we are seeing through our membership, there may be no more than a few hundred eligible businesses nationally who were denied access to JobKeeper and the cash flow boost on this basis. Having said that, it’s vital that those businesses are able to access the help they are entitled to,” said Scott Treatt, CTA,General Manager Tax Policy and Advocacy at The Tax Institute.
“While the review process was open to everyone, it can be hard for business owners and their accountants to know where to start. We were proactive in helping our members to identify extra information in their client cases and escalate to the ATO. The ATO was incredibly receptive to this and we were able to secure positive outcomes for our members who came forward with cases where a review was necessary.”
One Queensland-based member of The Tax Institute who had a client case reviewed said, “I received information about the Inspector-General’s report and its findings from The Tax Institute early on and very quickly worked out that one of my clients had a case that needed to be reviewed.”
“Once I escalated the case to the ATO through The Tax Institute, I was able to reach the right people and the review process went very smoothly and quickly. The ATO was wonderful actually – they even followed up after the review was concluded to ensure my client had received the funds. My client couldn’t have been happier with the outcome,” she said.
Another member of The Tax Institute escalated application reviews for both JobKeeper and the cash flow boost through The Tax Institute to the ATO prior to the release of the IGTO report.
“In both instances, the ATO allowed our claims once these were referred to the appropriate staff with the ability to understand the facts. Without The Tax Institute’s intervention there would have been two taxpayers who were very unfairly disadvantaged,” he said.
“When we were able to reach the correct contacts at the ATO, resolving the cases was much simpler.”
Among a membership of approximately 11,000, The Tax Institute has to date received 38 queries from members regarding clients affected by this issue, the majority of which were escalated to the ATO for review. This comes amid calls from various professional bodies for the ATO to review all applications that are potentially affected.
“We wholeheartedly agree that these cases should be reviewed, but practically speaking, there would be no efficient way for the ATO to identify each affected case and reach out to all these applicants. Trying to do so would likely just further delay a positive outcome for those applicants who are truly eligible, because they would have to wait for the ATO to review each previously denied application,” Scott said.
“At the end of the day, it’s about getting a good result for Australian businesses. If the best way to do that is to tackle cases individually then that’s what The Tax Institute will do.”
“This is a tricky part of the tax law, which has been applied to stimulus measures that needed to be rolled out quite quicky in order to help struggling business owners. We commend the Inspector-General of Taxation and Taxation Ombudsman for bringing the oversight to light, and the ATO for its readiness to work with us to resolve cases for our members and the businesses they represent.”
Other ABN-related stimulus measure disputes continue through the courts. The Tax Institute continues to watch these closely to understand the impact on our members and their clients. We have supplied members with detailed information regarding the upcoming Full Federal Court case, Apted and Federal Commissioner of Taxation  AATA 5139. We will work with the ATO to understand the administrative implications of any decisions handed down to ensure the correct outcomes are applied to all taxpayers.
For more information, please contact:
Kelly Emmerton – Media Contact, The Tax Institute
02 8223 0029
The Tax Institute is the leading forum for the tax community in Australia. Our reach includes membership of 11,000 tax professionals from commerce and industry, academia, government and public practice and 40,000 Australian business leaders, government employees and students. We are committed to representing our members, shaping the future of the tax profession and continuous improvement of the tax system for the benefit of all, through the advancement of knowledge, member support and advocacy. Read more at taxinstitute.com.au
[i]The report,A Report On Aspects Of The Australian Taxation Office’s Administration Of JobKeeper And Boosting Cash Flow Payments For New Businesses released on 21 December 2020 by the Inspector-General of Taxation and Taxation Ombudsman (IGTO) found that:
“…the meaning of "taxable supply", as modified by the JK and BCF [Business Cash Flow] support measures, was broader than the definition applied by the ATO in its earlier decisions.
The IGTO notes that this can mean, for the purposes of the JK and BCF support measures, a taxable supply can be made where an entity makes or acquires a financial interest, for example, by opening a bank account, as this constitutes the making of a financial supply. Such a supply might have been made during the commencement of the business, well before the business had made its first sale. Also, entities might have notified the ATO of these supplies within the requisite timeframe by means other than the lodgement of a BAS. For example, the ATO might have been notified of the making of a financial supply upon the opening of the business' bank account during the Goods and Services Tax (GST) registration process.”
The IGTO recommended that a new small business that may be eligible under these circumstances should contact the ATO to arrange a review of its earlier decision regarding their application. The Tax Institute has been proactively assisting members in doing so.
*All entities claiming the cash flow boost, and entities claiming JobKeeper on the basis of business participation (and not eligible employees), had to evidence business activity prior to 12 March 2020.
**Based on Treasury data showing JobKeeper applications from April 2020–November 2020.