On 26 February 2013, the government released a second round of exposure draft legislation and associated explanatory memorandum about refund claims of overpaid goods and services tax (GST).
These changes are based on recommendation 45 from the Board of Taxation review of the legal framework for the administration of the GST.
The government announced in the 2009-10 Budget its intention to amend this aspect of the law.
On 17 August 2012, the government announced that these changes are intended to apply for tax periods commencing on or after the date of the announcement (17 August 2012).
The proposed amendments will clarify the circumstances in which the restriction on GST refunds applies to overpayments of GST and allows taxpayers to self-assess their entitlement to a GST refund.
The amendments aim to protect the integrity of the tax system by ensuring that taxpayers who have passed on an amount of GST to their customers are not able to obtain a windfall gain, irrespective of how that overpayment occurs.
These are proposed changes only, and are not yet law.
Media release
For more information, refer to:
Exposure draft legislation and Explanatory Memorandum were released on 26 February 2013. The closing date for submissions is 26 March 2013.
Administrative treatment
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The Australian Taxation Office (ATO) will apply the existing law and follow current procedures until the proposed law is enacted, where taxpayers:
- are required to write to the Commissioner of Taxation to claim a refund of overpaid GST as a result of a mischaracterisation of a supply - for example, a supply is treated as taxable, but is actually GST-free
- are not required to write to the Commissioner to claim a refund of overpaid GST as a result of a miscalculation of an amount of GST payable, and can instead self-assess their claim to a refund of overpaid GST - for example, where the amount of GST payable was incorrectly calculated on a taxable supply of real property using the margin scheme.
After the new law is enacted, taxpayers will need to review their circumstances regarding their claims for refunds of overpaid GST made during the period between the date of the announcement and enactment.
If a taxpayer is required to seek amendments, and the amendments result in an increase in their liability, there will be no shortfall penalties or interest imposed where the amendments are made within 28 days after enactment - otherwise, the full GIC will apply from the date of enactment.
If amendments reduce a taxpayer's liability, appropriate interest on any overpayment will be paid.
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Last Modified: Wednesday, 27 March 2013