Australian Taxation Office is the government entity to administer the Jobkeeper and Cash Flow Booster payment. The job keeper and cash flow boost are the Australian federal government’s economic stimuli to the needed Australian business to help them survive during this global pandemic of COVID19.
To administer the system effectively, the Australian Taxation Office had introduced several measures to ascertain whether the business is eligible to receive the grant. One of this eligibility is that the business is required to have notified the Commissioner of assessable income derived in the 2018–19 year, or a taxable supply made between 1 July 2018 and 12 March 2020. This means that the business must have lodged the FY2018/19 tax return before the due date of 12 March 2020.
This strict interpretation of the eligibility rule means that new businesses that have made taxable supplies on or after 1 January 2020 would be unable to qualify if they report quarterly but would be eligible if they report monthly.
Similarly, entities that started their business after 1 July 2019, and report the GST on an annual basis would not meet the requirement, even if they made a supply before 12 March 2020.
A Seasonal Accountant Export commented that “There are many businesses that have been badly affected by the economic impact of COVID-19 who can demonstrate business activity before 12 March 2020, yet do not satisfy the requirements of the law. The ATO lacks the discretion to allow the cash flow boost and JobKeeper in these cases,”
However, it is essential to note that ATO’s hands are tied and that if ATO makes a decision, then objection and appeal will not be of any assistance.
It is crucial to understand and review the integrity rule, which is as follow:
An entity is not entitled to a JobKeeper payment for an eligible business participant unless:
- the entity had an ABN on 12 March 2020 (or a later time allowed by the Commissioner) — i.e. an entity that is recently created to access the JobKeeper payment will not qualify; and
- an amount was included in the entity’s assessable income for the 2018–19 income year about it carrying on a business, and the Commissioner was notified on or before 12 March 2020 (or a later time allowed by the Commissioner); or
- The entity made a taxable supply in a tax period that started on or after 1 July 2018 and ended before 12 March 2020, and the Commissioner was notified on or before 12 March 2020 (or a later time allowed by the Commissioner).
The Inspector-General of Taxation and Taxation Ombudsman (IGTO) has now finalized investigation into the ATO’s administration of JobKeeper and the cash flow boost for new businesses.
They found that the integrity rule is too restrictive. The IGTO has scrutinized ATO decisions in cases where genuine new businesses were deemed ineligible for the economic support measures because of a restrictive integrity rule, which requires entities to have notified the ATO of taxable supplies made before 12 March.
The IGTO’s findings revealed two key points: the meaning of taxable supplies was broader than the definition accepted by the ATO in its earlier decisions. The business activity statement was not the only way to provide notice to the Tax Commissioner.
Under the IGTO, they mentioned the taxable supplies could include financial supplies, and it does not need to be considered. Activities such as borrowing money, opening bank account, etc. could satisfy the definition of providing taxable or financial supplies. Also, IGTO mentioned that BAS lodgement is not the only way to notify the ATO about the taxable supplies; there are other acceptable ways.
According to the news from Accountant Daily as at 11 February 2021, The Tax Office has since confirmed that acquisition-supplies made during the commencement of an enterprise may satisfy the integrity rules but has refused to identify all potentially affected taxpayers it believes it would be infeasible to do so.
Instead, the ATO will only review cases where a business had previously challenged its decision.
If you have been blocked out of receiving the Jobkeeper, or had undergone job keeper audit, and found not eligible, please come and talk to EndureGo Tax. As a leading accounting firm and one of the most specialized accountant and tax agent in Inner West Sydney, who specialize in job keeper audit, we can help you review your cases and see ways to turn around the tide, please give us a call on 1800 841 312.