Commissioner publishes administrative treatment of GST refunds pending the introduction of Division 142

On 26 June 2013 the Tax Laws Amendment (2013 Measures No.4) Bill 2013 was introduced into the House of Representatives which proposed to repeal s 105-65 of Schedule 1 to the TAA and introduce Division 142 into the GST Act. Yesterday the Commissioner published his administrative treatment pending the enactment of the proposed laws. That treatment can be accessed here.

The publication notes that the Bill, as introduced, modifies the application of the amendments so that they  are intended to apply to refund claims relating to tax periods starting on or after 17 August 2012, but only for claims lodged on or after the date the Bill was introduced into the House of Representatives (26 June 2013).

The publication then outlines the following administrative treatment:

The ATO will apply the existing law and follow current procedures until the proposed law is enacted where taxpayers:

    • are required to write to the Commissioner to claim a refund of overpaid GST as a result of a mischaracterisation of a supply (for example, a supply is treated as taxable but is actually GST-free), and
    • are not required to write to the Commissioner to claim a refund of overpaid GST as a result of a miscalculation of an amount of GST payable (for example, the amount of GST payable was incorrectly calculated on a taxable supply of real property using the margin scheme), and can instead self-assess their claim to a refund of overpaid GST.

After the new law is enacted, taxpayers will need to review their circumstances regarding their claims for refunds of overpaid GST made during the period between the date the legislation was introduced into the House of Representatives and enactment.

If a taxpayer is required to seek amendments and the amendments result in an increase in their liability there will be no shortfall penalties or interest imposed where if the amendments are made within 28 days after enactment. Otherwise the full GIC will apply from the date of enactment.

If amendments reduce a taxpayer’s liability, appropriate interest on any overpayment will be paid.

The effect is that those taxpayers who may benefit from the current rules (eg, those taxpayers who have overpaid GST by reason of a miscalculation under the margin scheme) may seek a refund of GST. However, when the new provisions come in, it appears that the Commissioner will give such taxpayers 28 days to pay back that refund (unless they satisfy the provisions in the proposed Division 142) or be exposed to full GIC.

This administrative treatment is similar to that put in place previously, where the Bill was published as an exposure draft (my post on that treatment can be accessed here). However, an important difference  is that, as noted in an earlier post, due to the Federal election being called, the Bill has now lapsed, meaning that:

  • there is no “proposed law” or “new law” waiting to be enacted; and
  • there is no relevant date that “the legislation was introduced into the House of Representatives”

It may be that after the election the government of the day will re-introduce the Bill into the newly formed House of Representatives, and it may be that such a Bill will have transitional provisions which are similar to the Bill which was introduced into the House before the election was called, including provisions which retrospectively require taxpayers to disgorge refunds validly claimed under the current law. However, at the present time, that must be regarded as speculation. In this context, one must question the foundations upon which the Commissioner’s published administrative treatment is based.

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