The Administrative Appeals Tribunal has affirmed the ATO’s decision that Cessnock Holden Central Pty Ltd was not entitled to JobKeeper for employees from an acquired business.
The tribunal heard that Jorge Lamas, the sole director and shareholder of Cessnock Holden Central, had sought to acquire Cessnock City’s Cessnock Holden business, and had relied on ATO website guidance to determine if the business would be eligible for JobKeeper payments for former employees of Cessnock City if they were to be employed by him.
Mr Lamas claimed that guidance on the ATO’s website reassured him and his advisers that his employees would be eligible for JobKeeper payments even if the business changed hands after 1 March 2020.
Cessnock Holden Central was then incorporated on 16 June 2020 and completed the acquisition from Cessnock City on 1 August 2020.
Mr Lamas duly engaged the former employees of Cessnock City and paid them wages in the expectation of receiving JobKeeper payments for them for August and September 2020.
However, the ATO then advised that Cessnock Holden Central was not eligible for the wage subsidy payments, having failed to satisfy key JobKeeper eligibility requirements — that it carried on a business on 1 March 2020 and suffered a decline in turnover.
AAT senior member Robert Olding found that while the former Cessnock City employees had met the requirements set out in the JobKeeper rules, Cessnock Holden Central had fundamentally failed the eligibility requirements because it did not exist on 1 March 2020.
He also ruled that there was no need to determine if Cessnock Holden Central had satisfied the decline in turnover test because it had not carried on a business on 1 March 2020.
Mr Olding said that the decision “may seem harsh” to Cessnock Holden Central, but he noted that there was no other basis on which eligibility for JobKeeper payments might be considered.
“It is unfortunate if Mr Lamas was misled by or misunderstood the commentary on the ATO website, although, notably, the extract provided did not refer to the applicant’s situation; that is, a company not in existence at 1 March 2020,” said Mr Olding.
“The tribunal can only decide the review by applying the relevant legislation. Commentary that may have appeared on the ATO website is irrelevant to that task.
“There is no discretion available to the tribunal if the legislative requirements are not satisfied.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.