North Australian Contracting Pty Ltd and Commissioner of Taxation

The Administrative Appeals Tribunal considered the eligibility of North Australian Contracting Pty Ltd (the applicant) for Jobkeeper payments. The dispute arose because the Commissioner of Taxation disallowed the applicant's objection against a decision that it was not entitled to Jobkeeper payments for certain additional employees. The applicant argued that these employees should be treated as its employees for the purposes of the Jobkeeper scheme, despite being formally employed by an associated entity, North 23.

The primary legal issue before the Tribunal was whether the applicant and North 23 carried on the same business, such that employees of North 23 could be treated as employees of the applicant under section 9(6)(b) of the relevant Rules. This section allows for employees to be treated as employed by a later entity if they were employed in the same business at an earlier time, but that business was carried on by a different entity. The applicant needed to prove that the additional employees, who were employed by North 23 on 1 July 2020, should be considered its employees for Jobkeeper eligibility.

The Tribunal found that while the applicant and North 23 operated in the construction fit-out services sector and shared management and administrative staff, they generally serviced different tiers of builders. The applicant typically handled work for larger, tier-one builders, often requiring union agreements, whereas North 23 was more competitive for smaller projects due to lower labour costs. Despite these operational distinctions, the Tribunal noted that both entities dealt with the same union representative, staff moved between them as needed, and a consolidated profit and loss statement was prepared internally. Crucially, the Tribunal applied section 9(6)(b) of the Rules, which deems an individual to be employed by a later entity if they were employed in the same business at an earlier time, even if that business was carried on by a different entity. The Tribunal concluded that the applicant and North 23 were carrying on the same business, and therefore, the additional employees of North 23 were to be treated as employees of the applicant for the purposes of the Jobkeeper scheme.

The Tribunal affirmed the applicant's eligibility for Jobkeeper payments in respect of the additional employees, finding that the Commissioner's objection decision should not have been made.