Taxpayers warned about GST windfall gains

Warning: This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

Media release 2008/43

Tax Commissioner Michael D’Ascenzo today issued a taxpayer alert warning people that he intends to closely scrutinise GST refund requests that could result in windfall gains not intended by the law.

The Commissioner is concerned about situations where a taxpayer seeks to obtain a GST refund four years after the end of a tax period on the basis they had originally incorrectly classified the supply of goods or services as taxable, and now contend it should have been GST-free.

However, after four years the Commissioner may be unable to recover previously claimed GST input tax credits the Tax Office has paid out on that same supply. This could lead to a windfall gain if a refund was paid.

Taxpayers should be aware that although the Commissioner has a discretion to pay a refund for overpaid GST in exceptional circumstances, in business to business transactions the law does not require the Tax Office to pay a refund.

“The law is designed to prevent windfall gains for those who did not bear the economic burden of the GST,” Mr D’Ascenzo said.

Tax agents with information about people or companies who may be promoting arrangements covered by this alert should call the tax agent integrity service on 1800 639 745.

For more information

Full detail can be found in taxpayer alert 2008/17, available from www.ato.gov.au/atp

People who want information about the taxpayer alerts can call 1800 177 006.

Taxpayer alerts are intended as an ‘early warning’ to taxpayers and their advisers of significant tax planning issues or arrangements that the Tax Office has under risk assessment or about which it has concerns.

Last Modified: Wednesday, 27 August 2008

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