Commissioner issues ATO ID 2014/36 on operation of time limit in s 105-50 of Schedule 1 to the TAA

The Commissioner has published ATO ID 2014/36 ‘GST and changes in net amount where an entity has notified the Commissioner of an entitlement to a refund’ where he takes the view that the four year time limit in s 105-50 of Schedule 1 to the TAA does not apply to prevent unpaid GST from being taken into account in determining an entity’s entitlement to a refund under s 105-55. The ATO ID replaces ATO ID 2008/94 which took a similar view.

The issue arises in the following factual scenario:

  • an entity lodges and pays a net amount on its activity statement for a tax period
  • within 4 years of the end of that tax period, the entity realises that it omitted to claim an input tax credit and lodges a notification under s 105-55 of Schedule 1 to the TAA, thus preserving its entitlement to “a refund in relation to a net amount” for that tax period
  • at the time of revising its activity statement to record the unclaimed credit, the entity realises that it omitted to include an amount of GST for that tax period – the Commissioner did not given the entity a notification under s 105-50(3)(a) requiring payment of an “unpaid net amount” within 4 years

The Commissioner’s view is that the 4 year time limit in s 105-50 does not apply in the above circumstances, to the extent that the unpaid GST is less than the input tax credit, and that the unpaid GST is to be set off against the input tax credit.

The basis for the Commissioner’s view is that s 105-50 applies to an “unpaid net amount” and not to individual amounts of GST. While not expressly stated in the ATO ID, it also appears that the Commissioner considers that in determining an entity’s entitlement to a refund “in relation to a net amount” for a particular tax period under s 105-55, any amount of unpaid GST is to be taken into account in determining the extent of that refund.

Interestingly, the approach does not appear to work the other way, so that where an entity receives a notification under 105-50 in respect of unpaid GST, it is not entitled to offset any unclaimed input tax credits against that unpaid GST. This is because the 4 year time limit in s 105-55 expressly refers to an input tax credit that is attributable to particular tax period.

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