ATO ID published on GST refunds and offset of “administration fee”

On Friday the Commissioner published ATO ID 2013/40 ‘GST refund and offset of fee against reimbursed amount’ where the Commissioner would not exercise his discretion in s 105-65 of Schedule 1 to the TAA to refund overpaid GST to the extent that the customers paid an “administration fee”, which was paid prior to receiving the reimbursement or was offset against the reimbursement.

The entity had previously received a private ruling that certain products it had supplied were GST-free under s 38-45 of the GST Act. The entity intended to reimburse its unregistered customers an amount equal to the total overpaid GST, but only where the customer agreed to pay an administration fee. This fee could be paid prior to the reimbursement or by way of an offset against the reimbursement.

The basis upon which the Commissioner determined to restrict the refund to the net amount reimbursed was as follows:

As the entity will only reimburse the customer when it receives the administration fee, (either by direct payment or by offset against the amount which corresponds to the overpaid GST), the entity will not reimburse an amount equal to the overpaid GST to the customer. For the purposes of subparagraph 105-65(1)(c)(i) of the TAA, the amount reimbursed will be the full amount of overpaid GST less the administration fee. This net reimbursed amount will not be restricted by section 105-65 of the TAA.

The Commissioner need not give a refund of the overpaid GST under section 105-65 of the TAA, to the extent of the corresponding amount of the administration fee as the Commissioner is not satisfied this amount has been reimbursed.

GST refunds and s 105-65 continue to be a hot topic. One wonders what the outcome would have been if the customer had been paid the refund in full and, only after receiving the refund, paid the supplier an administration fee.

The issue of when an amount of overpaid GST is “reimbursed” to a customer will continue under the proposed introduction of Division 142.

One thought on “ATO ID published on GST refunds and offset of “administration fee”

  1. Hi Chris. I’m pretty sure this is my case. My client’s products were GST-free under s38-45 (as medical aids and appliances) which it realised after getting a private ruling. Further, it has been putting to the ATO that it needs to have the administration costs covered.
    Thanks for the note.
    Cheers, John Morgan.

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