A company was denied ‘JobKeeper’ payments in respect of staff who transferred from another group company, despite ATO advice that a new employer can have ‘eligible employees’, but, the company was also a new company (part of a corporate restructure) and was not in existence, on the key 1 March 2020 date.

See below, for further details.

[Tax Month – August 2021]



A company not in existence at 1 March 2020 did not qualify for JobKeeper payments for employees of a business it purchased.

The taxpayer was incorporated in June 2020 for the purpose of buying a car dealership in Cessnock. The purchase was finalised in August 2020. The taxpayer’s sole director and shareholder was satisfied that the taxpayer would qualify for JobKeeper payments for former employees of the business that it re-employed on the basis of this statement on the ATO website:

An individual can be an eligible employee of an entity even if the business in which the individual is employed changes hands after 1 March 2020. Therefore, these employees can be regarded as eligible employees of their new employer and the new employer can claim JobKeeper payments from the ATO for them.

The AAT, however, has confirmed that the taxpayer did not qualify for JobKeeper payments for the former employees it re-engaged as it did not carry on a business on 1 March 2020 (and had not suffered a decline in turnover) as required by s 7 of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the Rules). As a result, the rule dealing with the situation where a business changes hands (s 9(6)) was not relevant.

The statement on the ATO website did not protect the taxpayer as it did not refer to the taxpayer’s situation, namely a company not in existence at 1 March 2020.

(Cessnock Holden Central Pty Ltd v CofT [2021] AATA 2576, AAT, Olding SM, 29 July 2021.)

[LTN 146, 2/8/21]


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