Narlexi Pty Ltd and Commissioner of Taxation (Taxation)

[2022] AATA 993

Narlexi Pty Ltd and Commissioner of Taxation (Taxation) [2022] AATA 993 (11 April 2022)

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL	)
)	No: 2021/5416
SMALL BUSINESS TAXATION DIVISION	)

Re: Narlexi Pty Ltd
Applicant

And: Commissioner of Taxation
Respondent

DIRECTION

TRIBUNAL:  Senior Member R Olding

DATE OF CORRIGENDUM: 25 April 2022

PLACE:           Brisbane

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the written statement of reasons for the decision in this application such that:

1. in paragraphs [6] and [7] the references to “18 March 2020” are replaced with “12 March 2020”.

.............................[SGD].......................

Senior Member R Olding

Division:SMALL BUSINESS TAXATION DIVISION

File Number:2021/5416          

Re:NARLEXI PTY LTD  

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Senior Member R Olding

Date:11 April 2022

Place:Brisbane

The decision under review is affirmed.

.....................[SGD]..............

Senior Member R Olding

Catchwords

TAXATION – CORONAVIRUS ECONOMIC RESPONSE PACKAGE - CASH FLOW BOOST – where applicant incorporated in December 2019 – whether applicant could satisfy the requirement that it “made a taxable supply in a tax period that applied to it” that started on or after 1 July 2018 and ended before 12 March 2020 – where applicant accounted for GST quarterly and made its first made taxable supplies in the quarterly tax period ending March 2020 – decision affirmed

Legislation

Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 (Cth), s 5(6)(a)

Cases

Slatter Building Group Pty Ltd and Commissioner of Taxation [2021] AATA 456

REASONS FOR DECISION

Senior Member R Olding

11 April 2022

INTRODUCTION

1. This case concerns whether the applicant, Narlexi Pty Ltd, is entitled to the first of the cash flow boosts provided for in the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 (Cth) (‘BCF Act’).

2. The decision under review is the Commissioner of Taxation’s decision disallowing the applicant’s objection against his decision that Narlexi Pty Ltd is not entitled to the first cash flow boost.

   THE ISSUE AND THE LAW

3. The facts are not in dispute. The case turns upon a single issue:[1] whether Narlexi Pty Ltd satisfied the requirement in s 5(6)(a) of the BCF Act that:

   (a) the entity [ie the applicant] made a taxable supply in a tax period that applied to it that:
    
   (i) started on or after 1 July 2018; and
   
   

   [1]     The Commissioner does not dispute that the applicant satisfied other cash flow boost eligibility requirements,

   including the key requirements relating to the obligation to withhold PAYGW.

   [2] For a detailed discussion of the BCF Act and relevant textual and policy considerations, which I need not repeat here, see the Slatter case referred to immediately below.

   (ii) ended before 12 March 2020 . . .[2]

4. In Slatter Building Group Pty Ltd and Commissioner of Taxation,[3] this Tribunal decided that an applicant incorporated in January 2020 and accounting for GST on a quarterly basis could not satisfy this requirement. That is because there was no tax period that applied to it that ended before 12 March 2020. It followed that the applicant could not have made a taxable supply in a tax period that applied to it and ended before 12 March 2020.

   [3]     Slatter Building Group Pty Ltd and Commissioner of Taxation [2021] AATA 456.

5. Narlexi Pty Ltd says this case is different to the Slatter case. In Slatter, the applicant was incorporated in January 2020. Narlexi Pty Ltd was incorporated on 13 December 2019 and, the applicant says, started its business on 19 December 2019[4] from which date it was allocated an Australian Business Number[5] and registered for GST.[6]

   [4]     Applicant’s Statement of Facts, Issues and Contentions, page 2, [5]

   [5]     T Documents, T3 page 15.

   [6]     T Documents, T5 page 21.

6. Unfortunately for the applicant, while that is a distinction between the two cases, it is not a relevant one. The insurmountable difficulty for the applicant in Slatter was that it did not make any taxable supplies in a tax period that applied to it that ended before
   18 March 2020. Its first tax period was the quarterly tax period ending 31 March 2020. Consequently, it could not satisfy the requirement that it made a taxable supply in a tax period that ended before 18 March 2020.

7. Although incorporated in, and assuming it started its business in, December 2019,

   
   

   Narlexi Pty Ltd is faced with the same insurmountable difficulty. Like the applicant in the Slatter case, Narlexi Pty Ltd also accounted for GST quarterly.[7] It concedes that it did not make any taxable supplies until January 2020.[8] It brought GST to account on those supplies in its return for the quarterly tax period ending 31 March 2020, having lodged a nil return for the previous quarter. As the quarterly tax period ending 31 March 2020 did not end before 18 March 2020, and there is no earlier tax period in which Narlexi Pty Ltd made a taxable supply, it cannot satisfy the requirement that it made a taxable supply in a tax period that ended before 18 March 2020.

   [7]     The applicant says it could have applied for monthly tax periods but concedes that it did not: Applicant’s

   Statement of Facts, Issues and Contentions, page 2, [7].

   [8]     Applicant’s Statement of Facts, Issues and Contentions, page 2, [7].

8. The applicant says that factors outside its control led to it not making any taxable supplies until January 2020.[9] I have no reason to doubt that assertion, but it does not assist the applicant. The eligibility requirement is absolute: an applicant that did not make any taxable supplies before January 2020, and has quarterly tax periods, simply cannot satisfy s 5(6)(a) of the BCF Act.

   [9]     Applicant’s Statement of Facts, Issues and Contentions, page 2, [7].

9. As the Tribunal observed in Slatter, any legislative scheme that distributes large amounts of money must include eligibility criteria; Parliament must draw a line somewhere. The outcome of the application of such eligibility criteria is likely to be controversial at the margin. This case falls outside the eligibility criteria laid down by Parliament. Neither the Commissioner nor the Tribunal has any discretion to allow payment of the cash flow boost in these circumstances.[10]

   [10]    For completeness, I note that the applicant included this contention in its Statement of

   DECISION

10. It follows that the decision under review must be affirmed.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for the decision herein of Senior Member R Olding

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Associate

Dated: 11 April 2022

Date of hearing on the papers:	11 April 2022
Representative of the Applicant:	Mr G Versaci
Solicitors for the Respondent:	ATO Litigation and Legal Services

Facts Issues and Contentions (page 2, [8]):

‘The commissioner has said they will give discretion to grant further time, but the Applicant had no opportunity to be able to complete the conditions and the earliest option to report the taxable supply was the January – March 2020 BAS’.

It is apparent, as the contention may be intended to acknowledge, that the discretion referred to by the Commissioner relates to extending the time for notifying the making of taxable supplies that were in fact made in a qualifying tax period. As noted, there is no applicable discretion where no such supplies were made.