Tiani and Commissioner of Taxation (Taxation)

[2022] AATA 416

Tiani and Commissioner of Taxation (Taxation) [2022] AATA 416 (8 March 2022)

Division:SMALL BUSINESS TAXATION DIVISION        

File Number(s):           2020/7026

Re:Christie Tiani  

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:8 March 2022

Place:Sydney

The objection decision is affirmed.

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

Deputy President Bernard J McCabe

CATCHWORDS

ELIGIBILITY FOR JOBKEEPER PAYMENTS – whereas the applicant made an application for Jobkeeper payments – whether the applicant was eligible to receive Jobkeeper payments in her own right as an eligible business participant who conducted her own business – whether an individual qualifies as an eligible business participant – applicant was ineligible for Jobkeeper payments because she had previously given a Jobkeeper nomination notice with another entity – decision under review affirmed

LEGISLATION

Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth)

Coronavirius Economic Response Package (Payments and Benefits) Rules 2020

SECONDARY MATERIALS

Coronavirus Economic Response Package (Payments and Benefits) Bill 2020 Explanatory Memorandum
Coronavirus Economic Response Package (Payments and Benefits) Bill 2020, Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020, Appropriation Bill (No. 5) 2019-2020, Appropriation Bill (No. 6) 2019-2020; Second Reading

REASONS FOR DECISION

8 March 2022

1. The applicant in these proceedings was a graphic designer who conducted her own business. She also undertook what might be characterised as locum work as an employee in another company. She was working for that other company as the Coronavirus pandemic struck. When the Commonwealth introduced its package of relief measures that included the Jobkeeper payment, she completed a Jobkeeper employee nomination notice that enabled her then employer to seek Jobkeeper payments under the scheme. But the employer’s business was in trouble. The applicant was told on 13 July 2020 that her employment was to be terminated. That termination appears to have taken effect on 7 August 2020 after several weeks of ‘gardening leave’. The applicant, who had continued her own business on the side, completed another Jobkeeper nomination form - this time, in her capacity as a principal of her own business. The Commissioner rejected the claim for Jobkeeper payments on that basis.

2. In these proceedings, the applicant is disputing the Commissioner’s objection decision in respect of the fortnights ending 16 and 30 August 2020.

3. The Commissioner argues the applicant is unable to satisfy the requirements in s 12(4)(b) of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the Rules). The Commissioner’s principal argument, reduced to its essence, is that the Rules do not permit the lodgement of more than one nomination notice. The applicant says this “one and done” approach to the law is inconsistent with a more generous reading of the Rules that is appropriate given the beneficial nature of the legislation.

4. While one has every sympathy for the applicant who otherwise satisfies the Rules, I am afraid the Commissioner is right about the effect of s 12(4)(b). I explain my reasons below.

   THE APPLICANT’S WORK

5. I was provided with a statement (exhibit one) from the applicant that explained the factual background to her claim. She was not called for cross-examination at the hearing. I have no reason to dispute her factual account, and I accept it. What follows is a summary of that account.

6. The applicant is a graphic designer. She qualified in 2009 after a course of study. She has worked in the field ever since. In recent years, she has carried on business as a sole trader who undertakes work  a range of clients. She has an Australian Business Number. But she has also worked ‘in house’ as an employee or contractor for other businesses. In 2013-2014, she was employed by the PAS Group Ltd. In 2016-2017, the PAS Group engaged her as an independent contractor on a casual basis. Her records show she derived a modest but regular income from her work.

7. In December 2019, the applicant discussed a further engagement with the PAS Group. The applicant was asked to provide cover for somebody who was on maternity leave. Her statement suggests she was to be engaged as an independent contractor but the contract describes her as an employee. Whatever the precise characterisation of the contract, it provided for her to work four days a week split evenly between the applicant’s home (she had a young son to care for, so that arrangement suited her) and the PAS Group office. The arrangement commenced in January 2020.

8. The applicant produced pay records that showed her monthly pay. The records were summarised in her statement.

9. The PAS Group went into administration during 2020. The administrators gave notice to the applicant on 13 July 2020 that her engagement was being terminated as of 7 August that year. A copy of the letter of notice was provided (document ST12). She ceased work at the PAS Group on 13 July. She received a monthly payment on 14 July, which the payslip says relates to the period 1-31 July (document ST7), and a further reduced payment on 14 August. The payslip for the 14 August payment refers to a pay period of 1-31 August but the payment was described as an extra payment for the period 1-7 August. The termination letter explains that the applicant was paid for two days of work each week during the period of gardening leave. The administrators of the PAS Group made a final payment in respect of outstanding entitlements on 4 December 2020.

10. The applicant points out – and I have no reason to doubt – she continued to operate her own business as a graphic designer throughout the period she was engaged by the PAS Group and thereafter.

    THE FIRST NOMINATION UNDER THE JOBKEEPER SCHEME

11. It is notorious that the Coronavirus pandemic began to take hold in Australia in the first half of 2020. Many businesses were impacted early on by the disruptions associated with lockdowns and other public health measures. Public policymakers were concerned by the potential long-term impacts if businesses started to lay-off employees in large numbers as cashflow became an issue. Experience from previous downturns showed that many employees who were cut loose in this way might experience difficulties returning to the workforce. There was also a concern that businesses which jettisoned workers in the short term might be unable to recover quickly once conditions eased.

12. With those concerns in mind, the Commonwealth government enacted a range of measures that were designed to assist businesses to survive the disruption and preserve employment. One of those measures was the Jobkeeper payment. The enacting legislation, the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (the CERP Act), provided for the payment. The criteria governing entitlement to the Jobkeeper payment were contained in the Rules. The Rules were contained in a determination issued by the Treasurer pursuant to s 20 of the CERP Act. The determination is a legislative instrument that has the force of law. The Rules must be interpreted accordingly.

13. The Jobkeeper scheme provided for fortnightly payments during the life of the scheme to (a) eligible employers in respect of their eligible employees (dealt with under Division 2 of the Rules), and (b) eligible business owners for one eligible business participant (dealt with under Division 3 of the Rules). A simplified outline of the scheme in s 5 of the Rules provides a useful summary of its operation:

    The Jobkeeper payment is intended to assist businesses affected by the Coronavirus to cover the costs of wages of their employees.

    The Jobkeeper scheme starts on 30 March 2020 and ends on 27 September 2020. A business that has suffered a substantial decline in turnover can be entitled to a Jobkeeper payment of $1,500 per fortnight for each eligible employee. It is a condition of entitlement that the business has paid salary and wages of at least that amount to the employee in the fortnight.

    A business can also be entitled to a Jobkeeper payment of $1,500 per fortnight for one business participant who is actively engaged in operating the business.

    The Jobkeeper scheme is administered by the Commissioner of Taxation.

    The Commissioner pays the Jobkeeper payment to entities shortly after the end of each calendar month, for fortnights ending in that month.

14. The requirement referred to in paragraph 2 of the passage quoted above - that the business must have paid salary or wages to the employee in the fortnight - is set out in s 10 of the Rules. An entity that failed to comply with that condition in the fortnight was not eligible to receive the payment: see s 6(1)(d) of the Rules.

15. The PAS Group decided to participate in the Jobkeeper scheme. It wrote to each of its employees, including the applicant, in April 2020. It is convenient to set out the details of that interaction as the applicant recalled them in her statement at [12]-[13]:

    12. On about 10 April 2020, I received an email from the PAS Group that stated I was being notified by the PAS Group that it viewed me as an eligible employee of the PAS Group and that the PAS Group intended to participate in the JobKeeper scheme. The email stated the PAS Group required me to complete a nomination form and said in red text that if I did not provide my consent to be nominated participation in Jobkeeper would be at risk. A copy of that email is at Tribunal Document number ST14 on numbered page 57. On 28 April 2020, after follow-up requests from the PAS Group, I signed the employee nomination form on 28 April 2020 and provided it to the PAS Group: a copy of that form is at ST4, pp 59 – 60 of the Tribunal Book in this matter.

    13. I signed the nomination form on the understanding that if I did so I would keep my employment at the PAS Group and that if I did not sign the form I would not keep my employment at the PAS Group. I had taken employment with the PAS Group to provide more security of income to help with raising my child, and when I signed the form, I thought it was necessary to keep my job and would result in me keeping my employment. If I had known that I was going to lose my employment, or that I may lose my employment, I would not have signed the form.

16. The PAS Group was found to be eligible to participate in the Jobkeeper scheme and it received fortnightly payments in respect of the applicant, amongst others.

    SUBSEQUENT NOMINATIONS UNDER THE JOBKEEPER SCHEME

17. I have already explained the PAS Group notified the applicant on 13 July 2020 that her employment was to be terminated. The notice specified that the termination took effect as of 7 August of that year. After she ceased work on 13 July, the applicant decided to investigate whether she was eligible to receive Jobkeeper payments in her own right as an eligible business participant who continued to conduct her own business. She filled out the relevant forms on the ATO website which included the Jobkeeper nomination form (document T9) and two applications for Jobkeeper payments. The first application form was dated 7 August (document T10) and the second was dated 1 September 2020 (document T11). The application forms both related to the period 1 August through 31 August 2020. The Commissioner treated the second application form dated 1 September as the operative form: the rejection letter from the Commissioner dated 17 September refers to the 1 September form rather than the earlier one. Nothing turns on this discrepancy.

    THE LEGISLATION

18. The Commissioner’s letter of rejection dated 17 September 2020 says the applicant was ineligible for Jobkeeper payments because “You have previously given a Jobkeeper nomination notice with another entity”. The Commissioner says that decision is an inevitable consequence of the operation of the Rules.

19. Section 11 of the Rules sets out the requirements that an entity must satisfy in order to become eligible to receive a Jobkeeper payment in respect of an individual who is a business participant in a fortnight. Section 11(1)(d) of the Rules refers to s 12 for the criteria establishing whether an individual qualifies as an ‘eligible business participant’. (I will return to s 12 below.) Section 11(3) goes on to say an entity cannot be entitled to a Jobkeeper payment “for more than one individual (whether for the same fortnight or a different fortnight)”. Importantly, s 11(4) provides:

    No other entity to be entitled for the same individual

    (4) An entity cannot be entitled under this section to a Jobkeeper payment for an individual if another entity is entitled under this section or section 6 or 12A to a Jobkeeper payment for the individual.

20. Section 12(1) sets out the requirements for being an eligible business recipient as follows:

    (1) An individual is the eligible business participant for an entity for a fortnight if:

    (a) the individual is not employed by the entity at any time in the fortnight; and

    (b) the individual satisfies the requirements in subsection (2) at a time in the fortnight; and

    (c) the individual satisfied the requirements in subsections (3) and (4); and

    (d) the individual is not excluded from being the eligible business participant for the entity for the fortnight under subsection (6).

21. The applicant points out the reference in sub-section (1) to an entitlement ‘for a fortnight’ is significant. I will come back to that after setting out the provision lying at the heart of the dispute in this case, which is found in s 12(4). That sub-section requires the individual in question to give a nomination notice. Section 12(4)(b) then provides:

    (b) At the time the individual gives the entity the nomination notice:

    …

    (iii) the individual has not given any other entity, or the Commissioner, a nomination notice under this subsection or subsection 9(3) or 12B(4); …

22. The Commissioner says the plain words of s 12(4)(b)(iii) mean the applicant cannot be an eligible business participant within the meaning of the Rules because she had already given another entity – the PAS Group – a nomination notice under s 9(3) in April 2020.

23. This brings me to the argument over statutory construction which lies at the heart of the applicant’s case. The applicant says the repeated references in ss 11 and 12 to the applicant satisfying the rules ‘in a fortnight’ means the requirement in s 12(4)(b)(iii) – which omits any reference to a fortnightly period - should be read as if it only applied where there was already a nomination notice extant in that fortnight. The applicant argues that, at a minimum, the context of the legislation which features references to the fortnightly period in other provisions suggests a level of ambiguity in the text of s 12(4)(b)(iii). To put it slightly differently, the applicant argues the words ‘in that fortnight’ should be read into s 12(4)(b)(iii) to resolve an ambiguity that becomes apparent when one has regard to the legislative context.

24. The applicant points out s 3 of the CERP Act says the objective of the Jobkeeper scheme is “to provide financial support to entities to assist with the impact of the Coronavirus known as COVID-19”. The legislative scheme (and, for that matter, the extrinsic materials) points to a beneficial purpose that should be kept in mind when interpreting the words of the particular provision. The applicant says, in effect, it would be perverse not to read down the requirement in s 12(4)(b)(iii) of the Rules so that it only applied if there was a danger of double-dipping – that is, if more than one entity might be receiving payments in respect of the same individual. In substance, I am being asked to find the earlier nomination delivered in April to the PAS Group had effectively lapsed when the applicant’s employment was terminated so that it may be disregarded for the purposes of s 12(4)(b)(iii).

25. The applicant argues that, on the Commissioner’s preferred construction, an individual who was terminated after completing a nomination form might be disentitled if they subsequently completed a second form even if the first employer never obtained a payment under the scheme. That cannot be right, I was told.

26. While I acknowledge the beneficial purpose of the legislation, the policy evident in the legislative scheme does not support the construction preferred by the applicant. The policy is summed up by the name given to the payment: it is a Jobkeeper payment. The payment is intended to support businesses to retain their employees. The legislative scheme is not designed to provide assistance to businesses more generally, or even to support employment more generally. Notwithstanding the general language used in s 3 of the CERP Act, the focus on businesses retaining their workforces is apparent in the simplified outline in s 5 of the Rules which says the payment “is to assist businesses…to cover the cost of wages of their employees”. That targeted purpose is also evident in the extrinsic materials. The explanatory statement which accompanied the Rules explained:

    A business is not entitled to Jobkeeper payment under Division 3 of the Rules for more than one individual. If a business has more than one eligible participant, the business can only be entitled to receive the Jobkeeper payment in relation to one of the individuals. It is up to the business to determine which individual is nominated as the eligible business participant.

    Similarly, an individual can only create an entitlement for one entity. A business is not entitled to a Jobkeeper payment for an individual if another business is also entitled under either Division 3 or Division 2 for the same individual.

27. This point was also made in the second reading speech which accompanied the introduction of the CERP Act on 8 April 2020. The Treasurer described the Jobkeeper payment as:

    … a wage subsidy to those employers significantly impacted by the coronavirus outbreak to continue paying employees. The Jobkeeper payment will support employers to maintain their connection to their employees, helping them to reactivate their operations quickly – without having to rehire staff – when the crisis is over.

28. Lest there be any doubt about the targeted purpose, the whole thrust of the legislative scheme is directed to supporting businesses to retain their existing employees. To that end, the Rules make clear a notice is given at the outset in respect of an employee or business participant, and that entitlement to a fortnightly payment is thereafter assessed on a fortnightly basis if the other requirements are met. The legislation does not contemplate the nomination being given each fortnight; it lasts for the duration of the scheme.

29. The Commissioner’s primary submission is that the words of s 12(4)(b)(iii) admit of no ambiguity. He insists it would be inappropriate to read the words ‘in that fortnight’ into the plain text of the sub-section. While acknowledging the beneficial purpose of the legislation, the Commissioner denies there is any doubt about the meaning and import of the words used in the sub-section – and he disputes in any event the applicant’s articulation of the beneficial purpose. The Commissioner says his construction is more consistent with the purpose and policy of the legislative scheme.

30. The Commissioner goes on to point out s 9 of the Rules was amended when the government decided to extend eligibility under the scheme. Following the amendments, it became possible for an individual to give a second nomination notice – but only as an eligible employee. The amendments did not extend to the parallel provisions in relation to eligible business participants. The Commissioner says the fact amendments were thought necessary tends to support the construction of s 12(4)(b)(iii) for which he contends. The applicant, in its reply submissions, suggested the amendment in relation to business participants was unnecessary because it was already possible to disregard the earlier nomination form if it had effectively lapsed.

1. I do no think the argument over the amendments takes us anywhere. The ordinary principles of statutory construction which focus on the text suggest the Commissioner’s interpretation is correct. There is no ambiguity that justifies going beyond the plain words of s 12(4)(b)(iii) and importing additional language or otherwise qualifying the text. I am in any event satisfied the Commissioner’s preferred construction is consistent with the evident policy of the legislative scheme. That scheme is concerned with the preservation of a business’s existing workforce, rather than supporting employment or businesses more generally.

   THE OTHER ARGUMENT …

2. There is one further argument of the Commissioner which I do not need to address given the conclusion I have reached on the construction question. I will mention it briefly for the sake of completeness. Even if I accepted the applicant’s preferred construction of s 12(4)(b)(iii) of the Rules, she would have difficulty satisfying the requirement in the first fortnight. The facts as I have found them establish the applicant had not in fact been terminated when she completed the fresh nomination form on 3 August 2020. The termination notice given by the PAS Group dated 13 July 2020 expressly stated that her termination took effect on 7 August 2020, even if her last day of work was 13 July. It follows there was a nomination form that was still current when she purported to give a new nomination form on 7 August. That would mean the applicant was never eligible for the first fortnight in August 2020, regardless of what view I take of the construction issue.

   CONCLUSION

3. The objection decision under review is affirmed.

I certify that the preceding 33 (thirty -three) paragraphs are a true copy of the reasons for the decision herein of

.....................SGD....................

Associate

Dated:   10 March 2022

Date(s) of hearing:	9 February 2022
Counsel for the Applicant:	Andrew Broadfoot QC; Gareth Redenbach
Solicitors for the Applicant:	Hall & Wilcox
Counsel for the Respondent:	Julianne Jacques; Anna Wilson
Solicitors for the Respondent:	Self-represented