Robis Consulting Pty Ltd and Commissioner of Taxation (Taxation)

This matter concerned an appeal by Robis Consulting Pty Ltd (the applicant) against a decision of the Commissioner of Taxation (the respondent) regarding the Cash Flow Boost. The dispute centred on whether certain payments, specifically directors' fees, were constructively paid and whether the scheme was entered into for the sole or dominant purpose of obtaining or increasing the Cash Flow Boost. The case was heard by R Olding SM in the Administrative Appeals Tribunal.

The primary legal issues before the Tribunal were whether the applicant had constructively paid wages to its directors in the relevant period, and if so, whether the applicant's actions were undertaken with the sole or dominant purpose of obtaining or increasing the Cash Flow Boost. The Tribunal was required to assess the credibility of the applicant's director, Mr Johnson, and consider the various explanations provided for the payment of directors' fees and the lodgement of the business activity statement.

The Tribunal found that Mr Johnson's evidence regarding his lack of awareness of the "300% rule" was credible and consistent with his communications. The Tribunal also accepted, as unchallenged hearsay, evidence that Mr Johnson had stated he did not want the Cash Flow Boost or was unaware of it. The Commissioner had argued that Mr Johnson provided inconsistent explanations for the payment of directors' fees. However, upon careful consideration, the Tribunal found that the Commissioner's characterisation of these as three distinct and inconsistent explanations was not borne out by the evidence. The Tribunal noted that the applicant's letter of 14 May 2020, which the Commissioner relied upon as a first explanation, was intended to clarify the applicant's approach to declaring income and PAYG withholding, rather than providing a definitive explanation for specific payroll transactions. The Tribunal indicated that the Commissioner's assertion of a second and third alleged explanation also required careful scrutiny.

The Tribunal set aside the decision under review.