It found that the ATO had failed to consider that the integrity rule of making a taxable supply before 12 March 2020 could encompass input-taxed financial supplies, and therefore wrongly turned away new businesses that were technically eligible.
The Tax Office has since confirmed that acquisition-supplies made during the commencement of an enterprise may satisfy the integrity rules, but has refused to identify all potentially affected taxpayers because it believes it would be infeasible to do so.
Instead, the ATO will only review cases where a business had previously challenged its decision.
CPA Australia has now called on the ATO to identify and review all taxpayers who were potentially affected and has urged the government to provide the Tax Office with additional resources to undertake the task.
“Given the change to the interpretation by the Inspector-General as well, as the cases that are currently going through the AAT, it is really important that the ATO take another look to make sure that everyone who is entitled to receive the benefits gets it,” said CPA Australia senior manager tax policy Elinor Kasapidis.
“A lack of resources or a lack of funding is not necessarily appropriate and it is something that the government should support and assist the ATO to ensure everyone gets what they are entitled to.”
‘Erosion of public confidence’
IGTO Karen Payne had previously taken aim at the ATO’s decision not to proactively review all cases, noting that many businesses would continue to be left in the dark despite a change in the ATO’s stance.
Ms Payne said public clarification from the ATO would also be beneficial in alerting affected businesses of the change in views, but the Tax Office believes it might cause disproportionate confusion for others.
“In the IGTO’s view, if the ATO does not take action to identify affected taxpayers (and initiate appropriate remedial action) or does not alert the potential class of affected taxpayers to its change in precedential view, it will risk the erosion of public confidence in the fair and transparent administration of Australia’s tax system,” Ms Payne said.
“Affected entities may only become aware that they have an opportunity for the ATO to reconsider their eligibility if they have already objected to the ATO’s original eligibility decision or lodged a complaint with the IGTO.
“They may continue to labour under an erroneous belief that they were not entitled to access government support measures which were intended to provide them with financial support during this very difficult economic period.”
CPA Australia’s Ms Kasapidis believes the IGTO’s report has revealed lessons for the ATO to learn from, and has urged for it to swiftly resolve the issue.
“The ATO is fundamentally a revenue collection agency, they are not necessarily the first port of call to disperse public funds, but it is about learning lessons,” Ms Kasapidis said.
“We recognise that the ATO is very effective at contacting and engaging with a large number of businesses and taxpayers, so it is not so much about public confidence but rather what are the lessons learnt and how can we improve it in case there is a next time.
“It has been an ongoing issue and we just want to see a speedy resolution to it and to get that clarity so that businesses can move on.”
The ATO is also currently appealing in the Full Federal Court to overturn an Administrative Appeals Tribunal decision that granted a sole trader access to JobKeeper.
The AAT’s ruling had originally been hailed as a “vital boost” for small businesses who were locked out of the wage subsidy scheme, but taxpayers now face uncertainty as they wait on the Full Federal Court’s proceedings.