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The ATO has now committed to automatically reviewing decisions where it denied businesses access to JobKeeper and the cash flow boost based on its erroneous interpretation of its discretion to grant further time for a business to hold an ABN or provide notice to the commissioner of assessable income or supplies.
The revelation comes after the Full Federal Court had ruled in March that the ATO’s use of the discretion was narrower than intended.
A sole trader has been granted access to JobKeeper after the Full Federal Court unanimously ruled that the ATO had erred in its decision not to grant the business more time to establish its eligibility.
The JobKeeper test case centered around sole trader Jeremy Apted and whether he met an eligibility requirement to hold an ABN on or before 12 March 2020.
Mr Apted, a specialist retail valuer, had held an ABN since 2012 but cancelled it in 2018 as he sought retirement. He resumed work in September 2019 but failed to reactivate his ABN because he mistakenly assumed that he only needed one if he was required to be registered for GST.
When COVID-19 struck, Mr Apted reactivated his ABN and applied for JobKeeper, but was knocked back because he missed the 12 March 2020 deadline, prompting him to reach out to the Australian Business Registrar to successfully backdate his ABN reactivation to 1 July 2019.
Despite the backdated ABN registration, the ATO disallowed Mr Apted’s objection, leading the taxpayer to apply to the Administrative Appeals Tribunal (AAT) for a review.
The tribunal found in favour of Mr Apted, noting that he satisfied all of the eligibility criteria and was “the kind of person who was intended to benefit from the JobKeeper scheme”.
The ATO, however, turned to the Full Federal Court to appeal the AAT decision, arguing that the 12 March 2020 requirement was a point-in-time test and that if the Australian Business Register had been inspected on that date, it would have shown if an entity had an ABN.
The Full Federal Court agreed with the ATO’s view, but ultimately ruled that the commissioner should have exercised his discretion to allow a later date for Mr Apted to hold an ABN and thereby satisfy the eligibility rules for JobKeeper.