Clarification on JobKeeper and cash flow boost eligibility for new businesses welcome

SYDNEY, 21 DECEMBER 2020:  

“The report by the Inspector-General of Taxation and Taxation Ombudsman (IGTO) on the circumstances in which new businesses may be eligible for JobKeeper and the cash flow boost is very welcome,” said Robyn Jacobson, Senior Advocate at The Tax Institute. 

The IGTO found that adverse decisions were made by the ATO against a small number of entities that report GST quarterly or annually without initially seeking out whether the entity could provide additional evidence of supplies, not typically shown on a BAS, which might have satisfied the cash flow boost (CFB) or JobKeeper eligibility requirements. This was despite the fact that those businesses were relatively new but actively trading prior to the Government's announcement of the support measures on 12 March 2020. 

It is clear that certain financial supplies, such as opening a bank account, can evidence business activity, and evidencing that business activity is not limited to notifying the making of a supply by way of lodging a BAS. 

“Given the time constraints, the ATO did an exceptional job in providing necessary guidance on the stimulus measures,” said Robyn. 

“Importantly, this development will affect only a very small proportion of the more than one million businesses that sought CFB and JobKeeper. A few entities that received an adverse decision from the ATO may now become eligible,” added Robyn. 

“Based on their specific facts and circumstances, a small number of businesses now have an opportunity for their previously adverse decisions from the ATO to be reviewed in light of the clarification to the law as to what constitutes the making of a supply for CFB and JobKeeper purposes. These entities still need to evidence their business activity and have notified this to the Commissioner before 12 March 2020, although further time for notification may be allowed,” said Robyn.