The Trustee for JC Mobile Sharpening Discretionary Trust (Taxation)

The Administrative Appeals Tribunal considered the entitlement of The Trustee for JC Mobile Sharpening Discretionary Trust (the Applicant) to the Cash Flow Boost (CFB) under the Coronavirus Economic Response Package (BA Economic Response Package) Act 2020 (BCF Act). The dispute arose because the Commissioner of Taxation (the Respondent) contended that the Applicant had entered into or carried out a scheme for the dominant purpose of obtaining the CFB, thereby disqualifying it from entitlement.

The primary legal issues before the Tribunal were whether the Applicant satisfied the requirement of having made payments and withholdings in the relevant period, and crucially, whether the Applicant, or its associates and agents, had entered into or carried out a scheme, or part of a scheme, with the sole or dominant purpose of making the Applicant entitled to the CFB. This involved examining the Applicant's decisions regarding the remuneration of its sole worker, Mr Cook, including the timing and nature of payments, the withholding of PAYG amounts, and the issuance of payslips, particularly in light of the Applicant's financial position and prior tax planning practices.

The Tribunal reasoned that the Applicant bore the burden of proof to demonstrate that the objection decision should not have been made or should have been made differently, applying the standard of proof on the balance of probabilities. The Tribunal considered evidence relating to the Applicant's decision to treat Mr Cook as an employee, to remunerate him as such rather than making a trust distribution, to withhold PAYG from this remuneration, and to pay a significant bonus despite the Applicant being in a tax and accounting loss position. The Tribunal found that the Applicant failed to discharge its burden of proof in establishing that it did not enter into or carry out a scheme for the sole or dominant purpose of obtaining the CFB.

Consequently, the Tribunal affirmed the Reviewable Decision dated 8 April 2021, meaning the Applicant was not entitled to the Cash Flow Boost.