A new client of mine has been trading for many years under a company. I noticed that the company did not receive the Cashflow Boost ( they did get Jobkeeper for some periods)
The reason for not receiving the cashflow boost seems to be:
The quarterly BAS returns for September 2018 and December 2019 were originally lodged nil (on time) The previous accountant subsequently made a revision of both BAS returns in April 2020 reporting the correct sales and GST (there was activity within these periods). The 2019 tax return was lodged after 12 March 2020 (May 2020). Therefore the client did not notify the ATO of supplies within 1 July 2018 to 12 March 2020.
I know Commissioner has discretion to extend past that date as discussed in PSLA 2020/1. Do you think it is possible to request their discretion or a waste of time and resources? It is just a simple matter of not reporting on time but did correctly report a month later and was an active business.
Also please advice what is the process to apply for their discretion? I have been searching and searching but cannot find any application to request their discretion. Is it simply a phone call?
This seems very strange because the reporting of making GST supplies requirement is the same whether it is jobkeeper or cashflow boost. Even with Jobkeeper 2 this initial reporting period remained the same.
(6) For the purposes of paragraph (1)(f), the requirement in this subsection is satisfied if:
(a) the entity made a taxable supply in a tax period that applied to it that:
(i) started on or after 1 July 2018; and
(ii) ended before 12 March 2020; and
(b) the Commissioner had notice on or before 12 March 2020 (or a later time allowed by the Commissioner) that the entity had made the taxable supply.
I think your client probably qualified under (b) by lodging their tax return within their tax agent’s lodgement deadline as this is “later time allowed by the Commissioner”
This makes sense to me because they got jobkeeper.
So I expect that it is more a question of whether wages were reported. Was there anything in W1 in the March 2020 or June 2020 BASs? I think I can safely assume that is the case as they have been receiving Jobkeeper. So I think your issue is the ATO have just done their standard throw it out and see if they come and complain. There are 3 stages to the complaining process. First you ring them up and say where is my cash flow bonus and they say you don’t qualify for whatever reason. Usually trying to argue that you didn’t report wages until after 12th March 2020. This is irrelevant as it is all about wages paid in the March and June BAS. You need to refer them to https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/In-detail/Boosting-cash-flow-for-employers/?anchor=Newtobusiness&fbclid=IwAR2iG62dg8fpQMuaRC0T_nhZgvjM1Gp758INcHS-0G67EXpyUa2GaA9AgN0#EntitiesthatarenotregisteredforGST
the employees were engaged after 12 March 2020 but the business can demonstrate there were other reasons for engaging the employee after that date, taking into account the current economic environment that businesses are currently operating in.
You may also refer them to the Act section 5 https://www.legislation.gov.au/Details/C2020A00023
The ATO will then probably say well no our training says….. so you say you want a review. The review will come back saying the same thing. You then object to the review which will also come back saying the same thing. You then make an ATO complaint and they will hand over the money because the next step is the Ombudsman where they know they will lose. The reason you have to go through the review and objection is because you cannot make a complaint until you have exhausted these options and you cannot go to the Ombudsman until you have completed the complaints process.
To start this ring 132866 and press 7 when prompted. Objection form https://www.ato.gov.au/assets/0/104/300/362/29593063-367b-407d-89d4-9171011c22f4.pdf The ATO complaints form https://www.ato.gov.au/Complaints_Form/ This is where you should get satisfaction.
Don’t let them try and scare you with the suggestion it is just a scheme to get the CFB. That does not work if the wages were earned. There is no scheme in paying someone for doing work. It is against the law not to pay them. If you did pay them then you get the CFB it is against the law not to pay you the CFB. Nothing artificial at all, a worker must be paid for their labour.
From the limited information you have provided I think it is a case of arguing with them to pay the CFB not a case of late lodgements because they got Jobkeeper but even if the ATO argue late lodgement then you argue back it was on a tax agent lodgement program so other time allowed by the ATO. As per PSLA 2020/1
Nevertheless, to directly answer your question about the discretion. Don’t worry the ATO cannot be bloody minded you just go through the complaints and Ombudsman if they are, so yes worth a try. Minimum of $20k at stake. The issue here is you are saying, in all other ways your client did qualify other than the fact they had not reported making a supply in the period 1st July 2018 to 31st December 2019. You have two options here to argue the requirement for discretion.
1. Ombudsman report that merely opening a bank account, signing a lease or borrowing money is making a supply for GST purposes. As these are not required to be reported then default is they are reported. I particularly like the opening a bank account option as you have to report this when you apply for your ABN anyway. But you need to find one of these happened between 1st July, 2018 and 12th March 2020
2. PSLA 2020/1 Was the delay in lodging the 2019 tax return just part of the tax agent’s lodgement program?
From PSLA 2020/1
the Commissioner will likely grant further time where an entity has not lodged by the relevant due date because either:
· the entity has a pre-existing lodgment deferral in place, such as through the tax agent lodgment program
If not then is there any chance that any of the following applied to your client as that will allow them an excuse for not getting the paperwork in on time. This may work with the lodgement of the 2019 tax return, not the BASs because they were amended.
If one of the following circumstances applied to you when you should have lodged the paperwork you are entitled to an extension of time.
– Natural disasters or other disasters or events that may have, or have had, a significant impact on individuals, regions or particular industries
– Impeded access to records (e.g. records seized during a police search or retained as evidence in a court matter);
– The serious illness or death of a family member, tax professional or critical staff member
We have managed to get several across the line, including for example:
– A client whose mother became ill, they had to care for her, and eventually, she passed away
– A client whose child was exceptionally ill
– A client who was going through a messy relationship breakdown, affecting her mental well being
PSLA 2020/1 also allows for the discretion when it is clear that a business really has been operating even though lodgement requirements are not complied with. It is just a matter of proving that the business really did exist. This was a strong point in Adept’s case too http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/AATA/2020/5139.html but that case was in regard to an ABN. The point from Adepts is a fact is a fact.
Here is example 8 from PSLA 2020/1
11. Example 8 – reasonable circumstances
Annika is a hairdresser and works part time from her home. Annika is always busy, which means she does not focus on tax affairs. She does lodge tax returns but they are usually late and she will often lodge more than one tax return at a time. She lodged her 2017-18 return in February 2020. Annika is not registered (nor required to be registered) for GST.
In late May 2020, Annika’s business has completely ceased due to COVID-19 and Annika is not earning any income. Annika attempts to enrol in JobKeeper but cannot because she does not hold an ABN. Annika phones the ATO who tell her that she needs an ABN, needs to lodge her 2018-19 tax return, and will need to seek the Commissioner’s discretion.
Annika organises for her 2018-19 tax return to be lodged by mid-June 2020, which includes close to $35,000 business income. Annika also applies online for an ABN and backdates the start date to 1 July 2017. Annika then requests discretion from the Commissioner to grant further time to hold an ABN and provide notice.
Annika has consistently reported business income as a hairdresser in past returns up to 2018. The no-ABN withholding rules would not apply to Annika. Further information is requested and Annika provides photographs of pages of her booking diary from multiple months through 2019 that show clients regularly between 10am-2pm on weekdays. She also provides bank statements that show small regular payments from individuals, which align with some booking requests. Annika provides a statement that some of her payments are in cash but she records all payments in her diary and returns all income in her returns. Annika also provides screen shots of numerous messages that confirm appointments with clients and prices charged.
Although Annika has a history of lodging her tax returns late, the Commissioner is satisfied that Annika is running an active business, supported by further information and contemporaneous evidence that shows appointments and receipt of income for services during the relevant period. The Commissioner also takes into account that the 2018-19 tax return was lodged within a short period of time of being reminded of her lodgment obligations and relatively soon after 12 March 2020 and, on balance, considers it reasonable to exercise the discretion. The Commissioner also provides further time to hold an ABN as the no-ABN withholding rules do not apply to Annika’s payments. Annika meets all the other JobKeeper criteria, and as a result of exercising both discretions, Annika is entitled to JobKeeper.
Is it worth it? Most definitely.
Have you read this blog? https://bantacs.com.au/Jblog/many-more-businesses-entitled-to-stimulus-cash-but-the-ato-is-pretending-not-to-notice/?fbclid=IwAR2GGY4yj4-zZ84qJyyilvJQ3BIKM2t7J2lDf0MWAuoRc4iwPYIw8T1vBPM#more-726 and