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Small businesses without an ABN looking to access JobKeeper or the cash flow boost are set to benefit from the ATO’s latest internal update, but there continues to be no joy for start-ups.
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ATO updates discretion approach to entities without an ABN
29 September 2020
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9 minute read
The Tax Office has now updated its Practice Statement Law Administration PS LA 2020/1 to include new examples of requests for discretion it has seen over the past four months.
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PS LA 2020/1 was first released on 1 May and guides ATO officers in exercising the Tax Commissioner’s discretion to allow an entity further time to register for an ABN, or provide notice that an entity made a taxable supply, to satisfy the eligibility criteria for the cash flow boost and JobKeeper payment.
In a new example added, the ATO notes it will be able to exercise discretion to grant an entity further time to obtain an ABN after 12 March where it did not previously make sales to other businesses.
“Thanh only sells directly to customers at markets and fairs, and he does not sell to other businesses. As a result, the adverse consequences of not holding an ABN, particularly no-ABN withholding, don’t apply to Thanh’s business,” the new ATO example said.
The Tax Office has also updated a previous example, noting that where no-ABN withholding provisions previously applied to sales from an entity to other businesses, it would not be able to exercise its discretion to grant that entity further time to register for an ABN.
The new example is likely to open up eligibility for businesses that were previously rejected, but CPA Australia tax policy adviser Elinor Kasapidis believes the number will be small.
Ms Kasapidis also noted that new businesses looking for a way around the cash flow boost and JobKeeper’s restrictive tax notice requirement would continue to be disappointed by the update, with the anomaly outside of the ATO’s control.
“Ultimately, the number of taxpayers who benefit from this update will be small given that most Australian businesses hold an ABN,” Ms Kasapidis said.
“The notice requirement continues to be the key obstacle for new businesses. Of course, as a practical matter, finding a solution to this issue was out of the ATO’s hands.
“It’s a disappointing result for newly registered businesses, who remain unable to receive cash flow boost or JobKeeper payments.
“CPA Australia is continuing to call on the government to support businesses who were denied access to the stimulus measures.”
View the updated PS LA 2020/1 here.
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