Author Archives: chrissievers

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

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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.

International cases update – June 2013

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In June 2013 a number of decisions dealing with VAT and GST issues were handed down in the UK and Canada. From my research there were no decisions in New Zealand dealing with GST.

This month I focus on the decision from the Federal Court of Appeal in Canada in Tele-Mobile Company Partnership and The Queen 2013 FCA 149. The Court dismissed the taxpayer’s appeal against the decision of the Tax Court of Canada (2012 TCC 256) which agreed with the decision of the Revenue to deny input tax credits in respect of various billing credits given to subscribers to phone service contracts. The decision illustrates that the Courts in Canada adopt a similar approach to statutory interpretation in the context of GST (indeed generally). While the words of the statute are the starting point (indeed the end point as well in many cases), it is necessary to also apply a contextual and purposive interpretation, particularly where the words can support more than one reasonable meaning. My analysis of the decision can be accessed here.

I also note some other matters of interest arising in the UK:

  • In my international cases summary for March 2013 I analysed a decision of the UK Supreme Court in Her Majesty’s Revenue and Customs v Aimia Coalition Loyalty UK Limited (formerly known as Loyalty Management UK Limited) [2013] UKSC 15 the Supreme Court considered the question of whether the taxpayer (as the operator of a loyalty scheme) was entitled to input tax in respect of payments it made to participants in the scheme who provided goods to members of the scheme in return for the redemption of points. My analysis of the decision can be accessed here. The Court had previously referred questions to the European Court of Justice and in the appeal the majority of the Supreme Court found that reference should not have been made, essentially disregarded the findings of the ECJ because the facts had not been fully disclosed and upheld the decision of the Court of Appeal in favour of the taxpayer. The Court allowed the parties to make submissions on the form of orders to be made. In the course of those submissions, the Revenue invited the Court to make a further reference to the European Court of Justice. In Revenue and Customs v Aimia Coalition Loyalty UK Limited [2013] UKSC 42 the Supreme Court unanimously said no. In doing so, the Court observed that it would have been unfortunate if the position was otherwise, bearing in mind that the litigation had already lasted since 2003.
  • I also note the decision in Colaingrove Limited (Verandas) v Revenue & Customs [2013] UKFTT 343 where the First Tier Tribunal considered the issue of whether the supply of a caravan with a verandah involved a single supply or two supplies. The decision illustrates that the issue of single/multiple supplies continues to be hotly disputed in the UK. Last month I discussed a decision of the Upper Tribunal involving the question of whether the supply of cold water to barristers’ chambers was a separate supply. In the same month a decision was handed down on whether the supply of disposable BBQs involved a separate supply of charcoal.

United Kingdom

First Tier Tribunal

Alexandra Countryside Investments Ltd v Revenue & Customs [2013] UKFTT 348

  • VAT – property – zero-rating of residential conversion – s 30 and sch 8 VATA 1994 – conversion of pub to two residential units – pub containing manager’s flat that was incorporated into both units – whether note 9 to sch 8 denied zero-rating – HMRC v Jacobs considered – Appeal allowed

Colaingrove Limited (Verandas) v Revenue & Customs [2013] UKFTT 343

  • VAT – zero rating of caravans – supply of caravan with a verandah – whether a single supply or two supplies – test to be applied in context of zero rating

Deborah Lisbth La Roche v Revenue & Customs [2013] UKFTT 343

  • VALUE ADDED TAX – Cancellation of registration – whether an application stating a deregistration date of 20 December 2008 was received before that date – held it was – whether the appellant not liable to be registered with effect from that deregistration date – held she was not so liable – appellant’s appeal against decision not to deregister her with effect from that deregistration date allowed – paragraph 13, Schedule 1, VAT Act 1994 applied

Prescription Eyewear Ltd v Revenue & Customs [2013] UKFTT 357

  • VAT – exemption for medical care – whether applies to services provided by dispensing opticians in circumstances where spectacles are bought online – yes – whether single supply of spectacles subject to standard rate – no – or separate supplies of goods on the one hand and services amounting to medical care on the other – yes – Article 132(1)(c) Principal VAT Directive – Schedule 9 Group 7 item 1(b) Value Added Tax 1994 – appeals allowed

Canada

Tax Court

D-Win Computer Systems Inc v The Queen 2013 TCC 187

  • claim by joint venture partner for input tax credits in respect of money spent by joint venture partner for acquisitions made by joint venture operator – effect of joint venture rules and deeming provisions

Federal Court of Appeal

Tele-Mobile Company Partnership and The Queen 2013 FCA 149

  • entitlement to input tax credits as a result of Billing Credits and mail-in rebates provided to customers – whether credits and rebates a “coupon” or vouchers or simply a discount on the contract

Tribunal decision on s 105-65 and “claw back” of GST – also no jurisdiction to hear the issue

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On Friday, the Tribunal handed down its decision in Naidoo and Commissioner of Taxation [2013] AATA 443 where the Tribunal confirmed the Commissioner’s decision that the applicant was not carrying on an enterprise and was therefore not entitled to input tax credits.

Of greater interest is that the Tribunal rejected the Commissioner’s contention that the applicant was still obliged to pay GST in the relevant period by relying on s 105-65 of Schedule 1 to the TAA and the issue of a GST assessment for a positive net amount – even though the Commissioner formed the view that the applicant was not carrying on an enterprise. Also, the Tribunal found that it had no jurisdiction to hear an application to review a decision of the Commissioner with respect to s 105-65. The Tribunal noted that the Tribunal had, in the past, proceeded on the basis that it had jurisdiction (eg, Luxottica), but observed that the jurisdiction issue appeared not to have been previously the subject of deliberation.

This decision involved a similar contention that was unsuccessfully raised by the Commissioner in The Private Tutor and Commissioner of Taxation [2013] AATA 136. The Tribunal in that case also made some adverse comments on the Commissioner’s conduct in issuing assessments to the taxpayer for a positive net amount in an attempt to “claw back” GST while maintaining that the  taxpayer was not entitled to be registered for GST. My post discussing that decision can be accessed here.

After that decision, the Commissioner released a decision impact statement stating that he “respectfully maintains his view” that he is entitled to rely on s 105-65 to retain refunds in such circumstances. The Commissioner also noted that the Tribunal had reserved a decision dealing with this question in another case and he would review his position generally once the Tribunal hands down its decision in that matter. That has now occurred and one would expect the Commissioner to review his position stated in the decision impact statement.

The decision

The relevant facts and issues can be shortly stated:

  • the applicant was a partnership and was registered for GST for the tax periods between 1 April 2007 and 31 March 2011 and lodged activity statements. The activity statements were mostly for negative net amounts, save for three small positive net amounts.
  • the Commissioner conducted an audit and determined that the applicant was not carrying on an enterprise during the relevant period and cancelled its GST registration.
  • The Commissioner also found that the applicant was not entitled to input tax credits but was still liable for GST. As noted by the Tribunal (at [4]): (emphasis added) “The Commissioner formed the view that the Naidoo Partnership was still liabile to pay GST in the relevant period relying on s 105-65 of Schedule 1 to the Taxation Administration Act 1953 (TAA). Peculiarly, even though the Commissioner formed the view that the Naidoo Partnership was not carrying on an enterprise, he assessed the Naidoo Partnership to positive net amounts for the relevant tax periods.“

The operation of s 105-65

The Tribunal agreed that the applicant was not carrying on an enterprise and was not entitled to input tax credits. However, the Tribunal found disagreed with the Commissioner on the effect of s 105-65, and stated as follows (at [6]):

With respect to the issue of the application of s 105-65 of Schedule 1 to the TAA, I have decided that it does not apply in the way that the Commissioner argued and that the net amount for each tax period in the relevant period is zero, not a positive amount. As explained in the reasons below, this is because s 105-65 does not alter the net amount that is worked out under the GST Act.

The Tribunal noted that its reasons were substantially the same as those given recently in Re The Private Tutor and Commissioner of Taxation. The Tribunal also noted that it gave the parties an opportunity to file further written submissions addressing that decision and detailed submissions were filed. In the decision the Tribunal helpfully outlines the submissions of both parties, in particular those of the Commissioner.

The primary contention of the Commissioner appears to have been that s 105-65 of Schedule 1 to the TAA is not merely a procedural provision, it is a necessary step in establishing a taxpayer’s substantive liability in respect of GST. In particular, s 17-5 of the GST Act, which deals with the determination of “net amount”, is not self contained and should be construed with the more generic provisions of the TAA. The Tribunal rejected the Commissioner’s contention for the following reasons:

  • the GST Act provides for the working out of the net amount in a precise manner using clear and unambiguous language in s 17-5 of the GST Act.
  • the Commissioner’s contention that “net amount” means the amount that is arrived at after considering all the relevant provisions that bear on the taxpayer’s legal obligation or entitlements are taken into account (including s 105-65) has no basis in the statutory framework and leaves the issue at large creating uncertainty.
  • there is no disputing that the GST Act and the TAA are to be construed together, but it is difficult to see how s 105-65 can be worked into the statutory definition of net amount in circumstances where “GST” is also specifically defined in s 17-5(1) of the GST Act.
  • S 105-65 can only operate after the net amount has been calculated.

In conclusion (at [96]):

I conclude that, contrary to the Commissioner’s approach, s 105-65 of Schedule to the TAA is not a provision which allows the Commissioner to alter the net amount calculated under s 17-5(1) of the GST Act. There is nothing in the statutory provisions of either the GST Act or the TAA which produces the result that the Commissioner contends for, nor do any of the authorities to which he referred compel such a conclusion. Indeed, none of the cases expressly canvass the operation of s 105-65 with respect to the net amount. Accordingly, in the face of the statutory provisions, s 105-65 cannot be taken into account in the determination of the net amount for a tax period. I prefer the view that s 105-65 operates after the net amount for a tax period is calculated under the GST Act.

Jurisdiction to review decisions on s 105-65

The Tribunal observed that s 14ZZ of the TAA provided the Tribunal with jurisdiction to review a decision made by the Commissioner with respect to an objection. In the context of GST, that is an objection on the grounds that an assessment of net amount is excessive. Given the finding that s 105-65 did not alter the taxpayer’s net amount, the Tribunal therefore had no jurisdiction to review the Commissioner’s decision under s 105-65. This meant that the taxpayer’s recourse must be found in judicial review proceedings under s 39B of the Judiciary Act 1903 or the Administrative Decisions (Judicial Review) Act 1977.

The Tribunal also noted as follows:

Whether or not this was intended to be the case when the legislation was drafted is unclear. The Commissioner may be correct in his view (at paragraph [159] of MT 2010/1) that it would be desirable for taxpayers to be able to challenge such a decision under Part IVC of the TAA and also able to obtain merits review in the Tribunal. However, this is of no assistance in circumstances where the statutory framework does not provide for this outcome.

Exercise of the Commissioner’s discretion

The Tribunal also considered the question of whether the Commissioner should exercise his discretion in s 105-65 to refund the overpaid GST to the applicant. The Commissioner submitted that the discretion should not be exercised because the applicant would receive a “windfall gain” if a refund was paid.

The Commissioner appeared to contend that the entire of the GST paid by the applicant fell within s 105-65 (ie, including the entirety of the GST included in the activity statement). The Tribunal appeared to reject this contention and found that if it had jurisdiction to review the decision made under s 105-65, it would have only refused to refund the positive net amounts reported in the three activity statements lodged by the applicant.

Division 142

In the decision impact statement for The Private Tutor, the Commissioner noted that the draft legislation introducing division 142 into the GST Act  (and repealing section 105 – 65) would likely remove any uncertainty as to the correct approach in cases like this one. Last week legislation was introduced into the House of Representatives – my post can be accessed here.

Division 142 would appear to remedy the issue of jurisdiction as the effect is that the overpaid GST “is taken to have always been payable” and would appear to directly impact on the taxpayer’s net amount.

However, if the Commissioner is correct in his view that Division 142 would remove an uncertainty, this may illustrate a harsh application of the proposed division. By incorrectly registering for GST, a taxpayer is exposed to repaying input tax credits falsely claimed, but the full amount of GST that was incorrectly payable as a result of being incorrectly registered is “taken to” to have always been payable. For example, assume a taxpayer incorrectly registers for GST and claims input tax credits of $100,000 and pays GST of $100,000. That taxpayer would have a net amount of nil, but if the Commissioner subsequently determines that the entity was not carrying on an enterprise, the taxpayer will be required to repay the input tax credits in full but remain liable to pay the whole of the GST.

It will take time for the full implications of Division 142 to be realised, but this may be just a taste of its potential full force and effect.

News flash! Parliament introduces legislation on restricting GST refunds – Division 142 to replace S 105-65

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Today the Tax Laws Amendment (2013 Measures No.4) Bill 2013 was introduced into the House of Representatives. The legislation proposes the introduction of Division 142 into the GST Act. The Division will replace s 105-65 of Schedule 1 to the Taxation Administration Act. The legislation is to take effect for tax periods starting on or after 17 August 2012.

The proposed legislation significantly changes the landscape for GST refunds. As noted at 3.1 of the Explanatory Memorandum, the amendments are intended to:

ensure that excess goods and services tax (GST) is only refundable in certain circumstances. The amendments apply to overpayments of GST as a result of a mischaracterisation of a supply or arrangement or miscalculation of the GST payable, or for any other reason, if the overpaid GST has been passed on.

The documents can be accessed below:

The legislation was issued as an exposure draft earlier this year. My post discussing the exposure draft can be accessed here. My analysis of the exposure draft can be accessed here.

9 Submissions were received in response to the exposure draft and they can be accessed here. It appears that some of these submissions had an effect as there were a number of changes made to the exposure draft.

Tribunal finds applicant not carrying on an enterprise

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Yesterday the Tribunal handed down its decision in Clayton and Commissioner of Taxation [2013] AATA 428 where the Tribunal affirmed the decision of the Commissioner that the applicant was not entitled to input tax credits because it was not carrying on an enterprise.

In 2003 the applicant purchased rural land with the intention to start a business of eco-tourism. A business plan was prepared, the applicant conducted market research and in 2004 a development application was lodged with the local council for permission to construct four cabins and a reception building. Consultants were engaged to advise on how to site the cabins and how they should be provided with services like power, water and sewerage. A website was established and the applicant started to make improvements to the property as well as studying a diploma course in conservation and land management.

Having regard to the above matters, the activities of the applicant certainly looked like an enterprise. However, progress towards establishment of the business was slower than hoped and the local council was slow in processing the development application, with a decision not being made until 2008. The global financial crisis then struck in 2008 and the applicant decided to change the focus of their efforts and re-wrote their business plan to focus more on organising tours of the property and to offer environmental consultancy services.

The applicant did not have any paying tourists until 2012, which was after the period under review (being 2007 to 2011). Also, no consultancy services were provided during the period under review. Further, the cabins had not been built and there were no plans to do so in the absence of fresh capital.

The Tribunal acknowledged that a number of features of the applicant’s course of conduct had the hallmarks of a business, but found that the business had not come into existence by 2011. For a variety of reasons, some beyond the control of the taxpayer, the activities that occurred prior to 2011 were essentially preparatory in nature. Further, noting that the definition of “carrying on an enterprise” includes “doing anything in the course of the commencement or termination of the enterprise”, the Tribunal stated as follows:

17. Every business has to start somewhere. Where the business progresses from its foundations to operation within a reasonable time frame, it is easier to see how initial expenditures can be seen as part of a course of conduct that amounts to carrying on an enterprise. But where there is delay – where the momentum of the activities is lost – it becomes harder to make a connection between initial expenditure and the operations which result. That connection is even more difficult to establish where the business has not, or does not, commence trading in due course.

18. While there were some features of a business present during the period under review, the activities are better described as preparatory and exploratory in nature. They may yet lead to the establishment of an enterprise; one hopes so, for the taxpayers appear to be genuine in their desire to contribute to the growth of tourism in their local area. But that is not enough to meet the definition in the Act. I am not satisfied that they were carrying on an enterprise. 

Commissioner publishes Decision Impact Statement on Wynnum Holdings

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Yesterday the Commissioner published a Decision Impact Statement on the decisions of the Tribunal in Wynnum Holdings No 1 Pty Ltd and Commissioner of Taxation [2012] AATA 616 and [2011] AATA 296.

The Decision Impact Statement outlines the ATO’s response to the decision of the Tribunal and notes that the decision was consistent with the Commissioner’s submissions and with various GST rulings.

Comments on the Decision Impact Statement are invited by 14 August 2013.

My analysis of the decision of the Tribunal can be accessed here.

Commissioner publishes PSLA 2013/2 on GST treatment of charges under Division 81

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Yesterday the Commissioner published PSLA 2013/2 (GA) “GST treatment of Australian fees or charges under Division 81 of the GST Act”

The practice statement applies from 1 July 2013 to Australian government agencies (local and shire councils, state and territory entities and Commonwealth entities) who self assess the GST classification of supplies under s 81-10 of the GST Act. The statement applies to Australian fees or charges listed in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No.1) which are received as consideration for the supplies they make.

By way of background, Division 81 of the GST Act outlines the GST treatment of Australian taxes and Australian fees or charges received by Australian government agencies. From 1 July 2011 Division 81 was amended to enable Australian government agencies to self-assess the GST treatment of taxes, fees and charges. As from 1 July 2013, agencies must self-assess the GST treatment of all fees and charges (including those listed in the Treasurer’s Determination referred to above, which ceases to have effect from that date).

High Court dismisses taxpayer’s application for extension of time to seek special leave in Cyonara Snowfox

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Last week the High Court dismissed the taxpayer’s application for an extension of time to apply for special leave to appeal the decision of the Full Federal Court in Cyonara Snowfox Pty Ltd v Commissioner of Taxation [2012] FCAFC 177. The Court found that the applicant continued to advance grounds considered by the Full Federal Court and that the applicant failed to identify an error of law in the Full Court’s decision.  The decision dismissing the application can be accessed here.

My case analysis of the decision of the Full Federal Court can be accessed here.

International Cases Update – May 2013

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In May 2013 the following VAT decisions were handed down in the UK. My research disclosed no GST cases in New Zealand or Canada of significance.

It is noteworthy that each of the decisions handed down in the UK dealt with, in at least some way, the question of single/multiple supplies and the proper characterisation of transactions. An analysis of the cases shows that in the UK the legal principles to be applied appear to be reasonably settled, but what is clear is that each case is very fact sensitive.

This month I have looked in detail at the decision of the Upper Tribunal in HMRC v The Honourable Society of Middle Temple [2013] UKUT 250.

The issue in this case was whether the supply of cold water to barristers’ chambers (for which a separate supply was charged) formed part of a single supply of the leased premises or the separate supply of water. The case provides a detailed analysis of the legal principles to be applied in the UK with respect to the single/multiple supply issue. As noted by the Upper Tribunal, there is no absolute rule and each case is very fact sensitive.

Noting the reservations of Australia Courts with regard to relying on overseas authorities in taxation cases, these legal principles have been accepted and applied by the Federal Court in cases such as Saga Holidays and also by the Commissioner in various rulings. This decision helpfully brings those principles together and provides an update on the current position of the law in the UK.

My case analysis can be accessed here.

United Kingdom

Upper Tribunal

  • WM Morrison Supermarkets PLC v HMRC [2013] UKUT 247 – VAT – supply of disposable barbecues – whether VAT chargeable at a reduced rate on the charcoal element of the supply – reduced rate of VAT on solid fuel pursuant to Schedule 7A Group 1 Item 1(a) VATA 1994 – Commission v France Case C-94/09 considered – interaction with Card Protection Plan v C & E Case C-349/96 considered – significance of charcoal being a concrete and specific aspect of the supply – appeal dismissed.
  • HMRC v The Honourable Society of Middle Temple [2013] UKUT 250 – VAT – grant of lease of commercial premises with provision of cold water – whether single supply of leasing of immovable property or independent supplies of property and water – single supply of immovable property – appeal allowed

First Tier Tribunal

  • National Exhibition Centre Ltd v Revenue & Customs [2013] UKFTT 289 – VAT – financial services – exemption – Article 13B(d)(3) Sixth VAT Directive –  Group 9 sch 5 VATA 1994 – booking fees on concert ticket purchases – identity of supplier – nature of services supplied – whether for processing of payment by credit and debit cards  –  whether debt collection service
  • Nuffield Health v Revenue & Customs [2013] UKFTT 291 – VAT – Whether provision of pharmaceutical supplies and/or supply of and surgical fitting of prosthesis to patients were part of a single exempt supply or zero-rated for the purposes of the legislation (Value Added Tax Act 1983) – If a single exempt supply whether the provision of drugs and prosthesis should nevertheless be zero-rated as a result of the application of the legislation and Talacre Beach Sales v Customs and Excise Cmmrs. (C-251/05)

Tribunal hands down decision on “Multiflex” amendments allowing retention of refunds

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In Sanctuary Australasia Pty Ltd and Commissioner of Taxation [2013] AATA 371 the Tribunal has handed down what I believe to be the first decision relating to s 8AAZLGA of the TAA, which allows the Commissioner to retain refunds (including GST) pending an investigation.

Section 8AAZLGA was introduced in 2012 after the decision of the Full Federal Court in Commissioner of Taxation v Multiflex Pty Ltd [2011] FCAFC 142, where the taxpayer successfully applied for an order of mandamus requiring the Commissioner to pay a negative net amount reported in the taxpayer’s BAS. My analysis of that decision can be found here.

The facts of the case can be shortly stated. The taxpayer lodged an amended BAS which showed a refund entitlement. The Commissioner retained the refund and the taxpayer had applied to the Tribunal for a review of the Commissioner’s decision to disallow the objection against the decision to retain. However, before the application had been made, the Commissioner  issued an assessment to the taxpayer amending its net amount to “NIL”.

The Tribunal found that the taxpayer was not entitled to make the application because, upon the assessment being made, the taxpayer was no longer “a person dissatisfied” with a decision of the Commissioner. This was because once the assessment issued, there was no amount which the Commissioner was required to refund and so no “net amount” that the Commissioner was retaining under s 8AAZLGA. The proper course of action for the taxpayer was to object to the assessment.

The conclusion that the assessment overrides any refund entitlement by virtue of lodging a BAS is consistent with the view of the Full Federal Court in Multiflex where the Court observed as follows (at [26]):

The answer which the legislation provides to the Commissioner’s disquiet as to being obliged to make a refund based on a claimed net amount in a business activity statement which he knows to be wrong is straightforward. In such circumstances, he is entitled at any time to make an assessment of that net amount: s 105-5 of Sch 1 to the TAA. The net amount so assessed by the Commissioner necessarily supersedes whatever amount the entity earlier worked out on its approved form, if indeed it lodged such a form…Subject to the outcome of any subsequent objection or later appeal or review proceeding, the entity’s net amount will be the amount as assessed by the Commissioner.

That the taxpayer must now go to the time and expense of lodging a further objection (this time to the assessment) illustrates one of the difficulties of s 8AAZLGA. Also, the decision shows that the prospects of the Tribunal actually hearing an application to review a decision to retain a refund under s 8AAZLGA may be low, given that by the time the matter actually gets to hearing, the Commissioner will likely have completed his investigations and determined whether to issue an assessment or release the refund.

One matter which does raise some concern is the apparent contention of the applicant that the Commissioner did not give the applicant a notice of retention of refund as required by s 8AAZLGA(3). That sub-section states that the Commissioner “must inform the entity that he or she has retained the amount under this section”. The taxpayer lodged its amended BAS on 29 August 2012 and the Commissioner made a decision on 4 September 2012 to retain the refund. On 10 September 2012 the Commissioner informed the taxpayer that he was conducting an audit of its BAS for the relevant period – however, it is unclear whether the Commissioner expressly informed the applicant that it was retaining the refund pursuant to s 8AAZLGA. If the matter had proceeded to hearing, the Tribunal may have had to decide the difficult question of whether the failure to comply with the notice requirement invalidated the retention of refund.