JobKeeper – the first test case
Many small businesses have remained afloat thanks to the JobKeeper scheme which allows employers to keep their employees following the effects of Covid-19.
Other small businesses have significantly suffered financially after being denied by the Australian Taxation Office’s (ATO) of JobKeeper payments due to technicalities.
On 21 December 2020, the Administrative Appeals Tribunal ruled on the first JobKeeper test case by overturning the ATO’s Commissioner’s decision to deny a small business owner’s application for JobKeeper payments.
In this particular case, the applicant applied for the JobKeeper payment as a business participant on 20 April 2020 but was denied because he did not have an active ABN on 12 Mach 2020. Despite the applicant’s efforts to reinstate his otherwise dormant ABN and have it backdated to 1 July 2019, the Commissioner rejected the applicant’s objection to the decision and refused to exercise its discretion to allow extra time to meet the eligibility requirements.
Following a textual analysis of relevant legislation and the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) (“the Rules”), the Tribunal stated:
“The Jobkeeper scheme was created to deliver urgent assistance to active businesses with a minimum of fuss in the context of a pandemic. The Rules provided for a streamlined decision-making process that permitted the Commissioner to quickly and flexibly assess applications for payments. An interpretation that tended to create procedural obstacles to (or discontinuities in) the streamlined decision-making process would be inimical to that purpose.”
The Tribunal was satisfied that the ATO was able to exercise its discretion under the Rules in the circumstances. It concluded:
“It is likely most applicants in [this] position will not require the Commissioner to consider exercising the discretion in s 11(6). Those cases will be dealt with most expeditiously by requiring the applicant to engage with the established ABN registration process – a process that involves the Registrar in making reviewable decisions that can be considered by the Tribunal by way of merits review. If the applicant can satisfy the Registrar in the ordinary way that the applicant was carrying on an enterprise at the relevant time, the Registrar can issue an ABN. Provided the ABN has a date of effect that pre-dates 12 March 2020, the integrity rule will be satisfied. But cases may yet arise where the ABN registration process does not provide a satisfactory answer. In those cases, the exercise of the discretion will become an issue. We are satisfied that applicants forced to rely upon the exercise of the discretion were also intended to have access to review rights before the Tribunal. That approach ensures parity in the review rights available to different applicants. It would be surprising if the rights of review available to applicants relying on the exercise of the discretion were more limited than the rights afforded to applicants disputing decisions made in relation to the issue of ABNs under the ABN Act.”
Accordingly, the Tribunal set aside the objection decision under review by the Commissioner and decided that the applicant was entitled to the JobKeeper payment.
Each case will depend on the facts, however, if you have been denied JobKeeper consider seeking legal advice to understand your options. We’re here to help.