Login
iscover
A consulting business has failed to prove its entitlement to cash flow support payments that were provided to businesses during the pandemic.
Tribunal upholds ATO’s position in COVID-19 payment case
27 May 2025
•
8 minute read
The Administrative Review Tribunal (ART) has ruled in favour of the Commissioner of Taxation in a dispute concerning Cash Flow Boost payments.
The Cash Flow Boost was a form of economic support provided by the government to eligible small and medium businesses as part of its Coronavirus Economic Response Package. The payments were based on amounts an entity was liable to withhold from wages paid to employees.
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
The ART decision examined whether a specialist consulting and services organisation was eligible for the payments. The consulting business claimed it was eligible for the support payments based on 12 payments made from the business to one of its directors.
In the objection decision, the Commissioner determined that the consulting business had failed to satisfy the payment and withholding requirements for the Cash Flow Boost payment. The Tax Office said there was insufficient documentation to establish that the business had made payments subject to PAYGW to one of its directors in the relevant tax period.
The Tax Office noted that the payments in the bank statements for the business were not consistently timed payments, such as weekly, fortnightly or monthly. There were also no payment transactions that were recorded on the bank statements as salary/wages or director fees.
The Commissioner also said the last time wages were reported was in the 2016 income tax return.
A review of business activity statements between 1 July 2016 and 31 December 2019 also revealed that the business had historically not paid wages or director fees. There were also no payslips provided for the relevant periods.
The Commissioner's fundamental complaint was about the lack of contemporaneous evidence of both payments made by the business to one of the directors and the purpose of the payments.
While the ART accepted that certain payments were made by the consulting business to the director, it could not conclude that the payments gave rise to PAWGW obligations based on the available evidence.
"The descriptions of payments in the bank statements are not distinguishable in nature from the descriptions of payments in the bank statements for the time period prior to the relevant periods," it said.
"There is also no pattern of wage-paying by the applicant to [the director] in the past, which might provide the Tribunal with a suitable reference point. All these matters underscore the need for the Tribunal to place great weight on the absence of contemporaneous evidence which would explain the purpose for which the payments under consideration have been made."
The tribunal concluded that the consulting business did not meet the eligibility requirements for the cash flow boost for the relevant periods and that their entitlement to it was nil. It affirmed the objection decision made by the Commissioner.
You need to be a member to post comments. Become a member for free today!
