Thousands of businesses denied COVID-19 stimulus and wage assistance payments are set to have their eligibility reviewed retrospectively, as the Tax Office begins implementing a Federal Court ruling which could dramatically expand access.
The ATO has confirmed it will not appeal a March decision by the full Federal Court which considered the Tax Commissioner’s discretion over eligibility for JobKeeper and the Cash Flow Boost payment.
In a move expected to see millions in new payments to mostly small and medium businesses, the ATO will reconsider rejected applications. As well, taxpayers who did not apply because they believed they were ineligible can ask to be considered.
The Administrative Appeals Tribunal in November fast-tracked an appeal over the rejection of an application for the $93 billion JobKeeper scheme, considering the case of business operator Jeremy Apted. He had ceased operating his business and terminated his ABN, before restarting trade in 2019.
Mr Apted forgot to apply for a new ABN but was paying tax on the profits of his business. He later had the ABN registration backdated by the ATO.
In a new decision impact statement, the ATO said it would aim to finalise the review process by June.
A Tax Office spokesman said it was too early to provide definitive figures on how many rejections could be reversed and how much new payments would be worth.
Tax Institute senior advocate Robyn Jacobson said the ruling meant the commissioner had not made full use of his discretion in some cases.
Taxpayers will be allowed more time to show they hold an ABN, and to demonstrate evidence of business activity prior to March 12, 2020, such as assessable income or taxable supply.
“I would expect this could affect thousands of taxpayers,” Ms Jacobson said.
“The commissioner is going to be working through and identifying those taxpayers who have previously been denied JobKeeper or Cash Flow Boost, and that may be because they sought a review and were denied.”
To be considered eligible, taxpayers will still have to meet all the other criteria.
“There may be other taxpayers who never enrolled in JobKeeper, maybe because they thought they were not eligible, or they may have sought advice from a tax professional and been told they were not eligible. These people should contact the ATO,” Ms Jacobson said.
The cashflow payment is worth between $20,000 and $100,000. JobKeeper payments depend on eligibility across three phases and how many employees are involved.
An ATO spokesman said the decision related to the eligibility of business participants and not to eligibility for JobKeeper payments for employees. All other eligibility requirements will still need to be satisfied, with identical requirements for the cashflow payment.
“The ATO is reviewing its past decisions where a business has requested but not been granted the commissioner’s discretion to allow further time to hold an ABN or provide notice to the commissioner of assessable income or supplies,” he said.
“The ATO will initiate a review of these instances without any need for businesses to contact the ATO. We will contact businesses when we have completed our review or if we require more information.
“The result of a review for a business may mean that those who had previously not been granted further time to demonstrate their eligibility may be able to make claims for JobKeeper or become eligible for Cash Flow Boost payments.”
The ATO wants to hear from anyone who has not received a decision on their eligibility by May 31.