ATO reviews thousands of rejected JobKeeper applications following Federal Court ruling

The Australian Taxation Office (ATO) is reviewing thousands of rejected JobKeeper applications made by small businesses, after announcing it will not appeal a full Federal Court decision that ruled in favour of a sole trader.

In an impact statement published Friday, the ATO said it “accepts the Court’s views” that the ATO Commissioner should have exercised discretion when refusing a sole trader’s application for JobKeeper on the basis that they did not have an active Australian Business Number (ABN) on March 12.

“The Commissioner acknowledges that there are entities who might be impacted by the decision and is committed to addressing any such cases as a matter of priority,” the ATO said.

To address the Federal Court’s decision, the ATO has initiated a review into thousands of rejected applications, and any business whose eligibility may be reversed will be automatically notified by May 31.

The review follows a successful case brought by sole trader Jeremy Apted against the ATO in the Administrative Appeals Tribunal (AAT) late last year.

Apted disputed the ATO’s rejection of his JobKeeper application on the basis that he did not have an active ABN as of March 12, 2020 — the date required in the eligibility criteria for the wage subsidy scheme.

In December, the AAT found that Apted did in fact meet the JobKeeper eligibility criteria of having an ABN on March 12, 2020, because the Australian Business Registry had reactivated an old ABN and backdated the reactivation to before March 12.

At the time, the AAT said Apted was “the kind of person who was intended to benefit from the JobKeeper scheme”.

The ATO then sought to overturn the AAT’s decision in the Federal Court, which dismissed the appeal on March 24.

The Federal Court found that the Tax Commissioner had the authority to exercise discretion when assessing applications, and that in this circumstance, should have allowed Apted to meet the eligibility criteria by holding an active ABN from a later date.

The ATO’s statement that it will review both JobKeeper and Cash Flow Boost payment applications has quelled doubts that it would appeal of the Federal Court’s decision.

The ATO will now review any application that was rejected for not meeting the ‘point-in-time test’, which required an applicant to have had an ABN on 12 March 2020 in order to be eligible.

Businesses that may be eligible for either JobKeeper or the Cash Flow Boost payments will be contacted by the ATO.