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Cash flow boost on your BAS denied by the ATO because your 2019 tax return was late, or you are not registered for GST?

The ATO is wrong to do that and there are things you can do about it.

It is correct that section 5(1)(f) of the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 (the Act) links with sections 5(5) and 5(6) to require that that you have either lodged your 2019 tax return before 12 March 2020 or made taxable supplies and advised the Commissioner of this before that date.

I am aware of instances where a business has been denied the cash flow boost because their 2019 income tax return had not been lodged by 12 March. This does not make it late, because the ATO recently granted tax agents an extension until 5 June to lodge 2019 business income tax returns.

The approach noted by the ATO has been done without regard to subsection 5(5)(b) and 5(6)(b) of the Act. These specify that the timeframe requirement for lodgement of documents under section 5(1)(f) is explicitly, “or at a later time allowed by the Commissioner”.

On 1 May, the Commissioner released Practice Statement Law Administration PS LA 2020/1, titled, ‘Commissioner's discretion to allow further time for an entity to register for an ABN or provide notice to the Commissioner of assessable income or supplies’

Its stated purpose was to provide guidance on the relevant circumstances that should be taken into account when the Commissioner is considering whether to grant further time for an entity in respect of either the cash flow boost or JobKeeper payment.

PS LA 2020/1 states, “…..the Commissioner will likely grant further time where an entity has not lodged by the relevant due date because either:

they have a pre-existing lodgment deferral in place, such as through the tax agent lodgment program or the deferrals for taxpayers affected by the recent bushfires, or

they are a new business established from 1 July 2019 that is not registered or required to be registered for GST, but have made supplies during a period ending between the 1 July 2019 to 12 March 2020 period, or

there were exceptional and unforeseen circumstances; such as the loss of a significant amount of records due to the recent bushfires.

Additional information to support the proposition that the business was properly conducting a business may be sought by the Commissioner before the discretion to allow further time will be exercised.

What can you do?

If the first dot point applies, then it would appear to be as simple as drawing the Commissioner’s attention to either a specific lodgement deferral which had been granted or to the one granted to all businesses represented by tax agents. This is where the Commissioner recently allowed 2019 income tax returns to be lodged at the later time of 5 June 2020.

Other businesses may need to make a more detailed submission which has regard to what PS LA 2020/1 refers to as the policy intent of the cash flow boost or JobKeeper payment programmes and the particular facts of the case.

If you need help with the submission, Daniel Rands at [email protected] can advise you on the process and follow through your entitlement.

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