Tag Archives: son of holdback

PSLA issued on retaining GST refunds pending verification; Appeals update on “son of holdback” – Commissioner lodges Cross Appeal

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In the wake of the Multiflex decision, Tax and Superannuation Laws Amendment Act (2012 Measures No.1) Act 2012 was introduced to amend the Taxation Administration Act 1953 to allow the Commissioner of Taxation to hold refunds for verification prior to payment.  Yesterday, the Commissioner published PSLA 2012/6 ‘Exercise of the Commissioner’s discretion under section 8AAZLGA of the Taxation Administration Act 1953 to retain an amount that would otherwise have to be refunded’.  The purpose of the practice statement is to provide guidance to tax officers on when it is reasonable to exercise the Commissioner’s discretion to delay a refund amount pending verification of the taxpayer’s entitlement to the amount.

An analysis of the practice statement will be posted next week.

Appeals update

In September the Tribunal handed down its decision in in AP Group Limited and Commissioner of Taxation [2012] AATA 617, finding that the taxpayer’s objection was partially allowed, on the basis that certain incentive payments were not consideration for a supply.  The Tribunal handed down its interim decision in July 2012, [2012] AATA 409.

The Federal Court portal shows that on 12 October 2012 the taxpayer lodged an appeal to the Federal Court.  Also, on 19 October 2012 the Commissioner lodged a cross-appeal.  Given both parties have appealed, it would appear that the Federal Court will have an opportunity to consider one of the fundamental planks of GST, namely whether payments are consideration for, or in connection with, a supply.

The matter has been set down for directions on 6 November 2012.  Because the decision was by two Deputy Presidents, the appeal can be heard by the Full Federal Court (rather than a single Judge) if considered appropriate. One would expect that this would likely be the case.

My post discussing the Tribunal’s decision can be accessed here.

Tribunal hands down decisions finalising Wynnum Holdings and “son of holdback” cases

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On Friday the Tribunal handed down its decisions in Wynnum Holdings No 1 Pty Ltd and Commissioner of Taxation [2012] AATA 616 and AP Group Limited and Commissioner of Taxation [2012] AATA 617

Wynnum Holdings

On 5 May 2011 the Tribunal handed down an interim decision ([2011] AATA 296) dealing with two preliminary matters, being whether the Commissioner’s claim was made out of time (“the timing issue”) and whether the Commissioner was prevented from recovering because of a ruling previously made in the Applicant’s favour (“the ruling issue”.  The Tribunal found against the Applicant on both these matters and found it necessary to decide the remaining issues of whether the Applicant was carrying on an enterprise at the time it purchased a property in 2003, or whether it was acting as bare trustee of joint venture parties (“the enterprise issue” and whether the property is properly characterised as “commercial residential premises” or “residential premises” (the commercial residential premises issue”).

The Tribunal found in favour of the Commissioner on both the remaining issues.  My analysis of the decision can be accessed here.

AP Group Limited

Also, the Tribunal handed down its final decision in AP Group Limited and Commissioner of Taxation [2012] AATA 617, finding that the taxpayer’s objection was partially allowed, on the basis that certain incentive payments were not consideration for a supply.  The Tribunal handed down its interim decision in July 2012, [2012] AATA 409 and my post discussing that decision can be accessed here.

The decision confirms that adjustments for three of the incentives were to be made for the May 2007 and March 2008 tax periods (being the sample months for testing), thereby reducing the taxpayer’s net amounts for those tax periods.  In the interim decision, the Tribunal raised the the issue of whether the Commissioner could rely on the discretion in s 105-65 to refuse to pay the refunds and whether the Tribunal has jurisdiction to review such a decision.  The Tribunal did not appear to consider this issue.