I have prepared a paper looking at the concept of “passing on” in the context of Division 142, which was recently introduced into the GST Act.

Division 142 replaces s 105-65 of Schedule 1 to the TAA and effectively creates a deeming regime, whereby overpaid GST that has been “passed on” to another entity is taken to have always been payable until that other entity is reimbursed for the passed on GST. The Commissioner retains a discretion to pay refunds, but it is expected to have a narrow operation.

Determining whether GST has been “passed on” is therefore a critical matter as it provides the trigger for the operation of the new regime. If no part of overpaid GST has been passed on, taxpayers will be entitled to a refund as a matter of right. However, to the extent that the overpaid GST has been passed on, taxpayers must reimburse the other entity or undertake the difficult task of convincing the Commissioner to exercise his discretion.

The paper can be accessed here. It can also be accessed from the “My Articles” part of the site.