Tribunal finds letter by taxpayer constitutes a notification of entitlement to input tax credits

In North Sydney Developments Pty Ltd and Commissioner of Taxation [2014] AATA 363 the Tribunal found that a letter provided to the Commissioner was a valid notification for the purposes of s 105-55(1)(a) of Schedule 1 to the TAA in relation to input tax credits for tax periods ending December 2005 and January 2006.

Set out below are the principal events underlying the input tax credit claim as identified by the Tribunal and the conclusions of the Tribunal. As I appeared in the case I will not be providing an analysis of the decision.

The principal events were as follows:

  • May 2004 to November 2005: North Sydney lodged 17 monthly Business Activity Statements reporting GST purchase payments totalling $1,070,800, and no sales. The Commissioner accepted that North Sydney was entitled to input tax credits in relation to the amounts claimed in each statement.
  • December 2005: North Sydney did not lodge a Business Activity Statement for the month.
  • January 2006: North Sydney again did not lodge a Business Activity Statement for the month.
  • 16 February 2006: the Commissioner issued a “lodgement and payment” notice requiring North Sydney to lodge its December 2005 Business Activity Statement, and pay any liability amount it recorded.
  • 8 March 2006: a mortgagee appointed a controller to the substantial property, whose (not yet completed) development had been the reason for the $11.78m GST purchases reported in the Business Activity Statements lodged up to November 2005.
  • 24 March 2006: the Commissioner issued a further “lodgement and payment” notice requiring North Sydney to lodge its January 2006 Business Activity Statement, and pay any liability amount it recorded.
  • 23 June 2006: North Sydney was placed in receivership, and the receiver subsequently sold the partially completed development.
  • 3 September 2009 North Sydney wrote to the Commissioner. The letter reported the receiver’s appointment on 8 March 2006 and stated that “ASIC and the receivers” had taken possession of all North Sydney’s books and records, and refused to either return them or provide access to them. The letter continued with statements to the effect that:
      1. North Sydney was unable to complete the lodgement of Business Activity Statements for December 2005 and January 2006
      2. The letter was to “provide notice that substantial GST refunds are due for these months”.
      3. North Sydney would be unable to lodge Business Activity Statements for those months until it gained access to the necessary books and records.

After considering a number of authorities (including Central Equity Ltd v Federal Commissioner of Taxation [2011] FCA 908; MTAA Superannuation Fund (RG Casey Building) Property Pty Ltd v Commissioner of Taxation [2011] AATA 769; National Jet Systems Pty Ltd v Commissioner of Taxation [2011] AATA 766 and Brookdale Investments Pty Ltd v Commissioner of Taxation [2013] AATA 154) the Tribunal observed as follows (at [25]):

The common themes resonating through the decisions to which I have referred are the absence of any formal notification content requirement, a disavowal of amount specificity and the apparent sufficiency of a notice where it communicates a claim relating to a particular tax period in relation to a particular kind of tax liability. Implicit in the third theme, and variously expressed in the judgments and reasons, is a refusal to endorse any particular requirement for the details, grounds or even circumstances relied on to support the claim. 

The Tribunal’s conclusion was as follows (at [31]):

In my view, North Sydney’s 3 September 2009 letter did notify the Commissioner of “the refund, other payment or credit” to which TAA Schedule 1: s 105-55(1)(a) applied. It did so for two reasons. Firstly, the provision required no greater specification than the tax period involved, and the nature of the refund or input tax credit claimed. The letter, by describing the notification as relating to the expected outcome of Business Activity Statements for December 2005 and January 2006, satisfied the requirements of a complying notification. Secondly, if the letter required some greater degree of specificity in order to permit satisfaction that any subsequent claim was covered by the notification, the letter also satisfied that requirement. It did so because it indicated that the reason for the notification was the lack of access to the contemporary books and records in the possession of the receiver. On this view any subsequent claim would be limited to a summarised reproduction of the information in the purchase, payment and supply records maintained by the receivers. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 thoughts on “Tribunal finds letter by taxpayer constitutes a notification of entitlement to input tax credits

  1. Hi Chris. I’ve just read the judgment and noticed that it doesn’t address the issue of the Commissioner’s ‘lodgement and payment’ notices being notifications under 105-55(1)(b) (as set out in the summary of the private ruling). Can you give any insights as to why the argument was changed to being notification under 105-50(3)(a) instead? Thanks.

    • Hi Catherine,

      I agree it is a bit unclear in the judgment.

      The issue involved whether s 93-10(1) applied, which provides that s 93-5 (4 year limit on claiming credits) does not apply if the input tax credit arises out of circumstances that also gave rise to an excess to which para 105-50(3)(a) applies. The issue was whether the lodgement and payment notices triggered that exemption. The Commissioner accepted that such a notice could be a notice for the purposes of para 105-50(3)(a) but apparently only where there is an actual amount of GST payable – in our case, there was no GST payable, only an input tax credit entitlement.

      Hope that helps.
      Chris

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