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  • Court and Administrative Appeals Tribunal decisions

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    AAT decision on cash flow boost and new businesses

    On 10 March 2021, the Administrative Appeals Tribunal (AAT) handed down its decision in Slatter and Federal Commissioner of Taxation [2021] AATA 456External Link.

    AAT decision

    The decision relates to meeting the eligibility criteria for the government’s economic stimulus measure Boosting cash flow for employers.

    The AAT held that the applicant was not eligible for cash flow boost payments because they did not make a taxable supply in a tax period that applied to it that started on or after 1 July 2018 and ended before 12 March 2020. Since the applicant was incorporated in January 2020 and registered for GST on a quarterly reporting cycle, it did not have a tax period that applied to it that ended before 12 March 2020.

    How it affects you

    The decision supports the approach we have taken to the administration of the measure.

    The government’s JobKeeper stimulus measure involves similar considerations in relation to claims for an eligible business participant, resulting in the same interpretation being applied consistently across the measures.

    Full Federal Court decision on JobKeeper and backdated ABNs

    On 24 March 2021 the Full Federal Court handed down its decision in Federal Commissioner of Taxation v Apted [2021] FCAFC 45External Link. The case concerned the requirement, for JobKeeper eligible business participant claims, that the entity had an ABN on 12 March 2020, or a later time allowed by the Commissioner.

    The court held that backdating an ABN to have an effective date on or before 12 March 2020 did not satisfy the requirement for the entity to have had an ABN on 12 March 2020.

    The court also held that a decision in respect of the Commissioner’s discretion to allow a later time to have an ABN is reviewable in the manner prescribed by Part IVC of the Taxation Administration Act 1953 as part of a decision on an entity's entitlement to JobKeeper and that the Commissioner's discretion should be exercised in the applicant's circumstances.

    The ATO has decided not to appeal the FFC decision.

    Our response to the FFC decision is outlined in the Decision Impact Statement, which is open for comment until 28 May 2021.We consider that the court's decision applies equally to the identical requirements for the Cash Flow Boost.

    In response to the court's decision and to clarify the circumstances in which the Commissioner will exercise his discretion, we have updated our law administrative practice statement PSLA 2020/1 Commissioner's discretion to allow further time for an entity to hold an ABN or provide notice to the Commissioner of assessable income or supplies.

    The updates to PSLA 2020/1 also apply to the discretion to allow further time to provide notice of assessable income/taxable supplies to the Commissioner.

    The FFC's decision has not changed the need to satisfy all of the other eligibility conditions.

    This means entities who satisfy all the other eligibility conditions and whose circumstances fall within the guidance outlined in PSLA 2020/1 may now become eligible for the cash flow boost.

    How it affects you

    As a result of the FFC's decision, we will be revisiting decisions where we consider the outcome may have been different if the court's reasoning was applied. Some employers who were ineligible for the cash flow boost may now become eligible based on this decision.

    This action is being taken to ensure that the law is consistently and fairly applied. It will only result in access to a stimulus credit where the Commissioner considers that overall eligibility for Cash Flow Boost credits is met. In other words, where eligibility will still not be established (because one or more other eligibility criteria has not been satisfied) even if the Commissioner’s discretion was exercised, the Commissioner will not revisit his previous decision.

    What happens next

    You don't need to do anything. If you have a decision which declines to exercise the Commissioner’s discretion, but you meet all other requirements, the Commissioner will automatically review your circumstances and whether his discretion should be applied.

    There is no need to contact us at this time. From 20 May 2021 we will write to you to confirm we are reviewing your previous request to grant the discretion and provide information on the next steps. In some cases we may require further information. We anticipate we will have contacted you by 1 June.

    Once we have completed the review, if we've found you to be eligible for the cash flow boost, we will

    • notify you that you’re now eligible for the cash flow boost
    • credit your activity statement account with the relevant cash flow boost amounts.

    Our aim is to have the process completed by the end of June 2021.

    If we find that you're still not eligible, it may be because your circumstances do not fall within the guidance outlined in PSLA 2020/1, or because you don’t meet the other eligibility requirements. Check out our eligibility companion guide which gives an overview of how we determine eligibility.

    We are taking a similar position in regard to eligibility for JobKeeper. For further detail, see JobKeeper Payment and the 'later time' discretion.

      Last modified: 21 May 2021QC 61925