ATO Interpretative Decision
ATO ID 2006/175
Goods and Services Tax
GST and refunds of GST incorrectly included in the price of non-taxable supplies from 1 July 2006FOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Will the Commissioner exercise his discretion under section 105-65 of Schedule 1 to the Tax Administration Act 1953 (TAA) when an entity, a business operator:
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- incorrectly included goods and services tax (GST) in the price of a non-taxable supply to a recipient that is registered for GST; and
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- has reimbursed the recipient for the amount of GST incorrectly included?
Decision
Yes, in these circumstances the Commissioner will exercise the discretion provided in section 105-65 of Schedule 1 to the TAA and refund the amount to the entity.
Facts
The entity is a business operator.
The entity incorrectly included GST in the price of a non-taxable supply to a recipient that is registered for GST. The entity has subsequently reimbursed the recipient for the GST incorrectly included in the price of the non-taxable supply.
The entity is registered for GST.
Reasons for Decision
Subsection 105-65(1) of Schedule 1 to the TAA provides that where GST is incorrectly included in the price of a non-taxable supply, the Commissioner is required to refund or credit the overpaid amount to the supplier if:
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- the Commissioner is satisfied that the supplier has reimbursed the GST incorrectly included in the price to the recipient of the supply; and
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- ?the recipient is neither registered nor required to be registered for GST.
However, where either or both of the above conditions are not met, subsection 105-65(1) of Schedule 1 to the TAA provides that the Commissioner is not required to refund the amount, but has a discretion to do so.
Although the entity has reimbursed the recipient for the GST incorrectly included in the price, the requirements in subsection 105-65(1) of Schedule 1 to the TAA are not satisfied as the recipient of the supply is registered for GST. Therefore, the Commissioner is not required by law to refund the overpayment of GST.
Law Administration Practice Statement PS 2002/12 outlines the Tax Office's policy in relation to the exercise of the discretion in subsection 105-65(1) of Schedule 1 to the TAA. Appendix 1 and 2 of PS 2002/12 provide that where a supplier has reimbursed a recipient for the amount of GST incorrectly included in the price and that recipient is registered for GST, the Commissioner will exercise their discretion and allow the refund.
Therefore, as the entity has refunded the amount of GST incorrectly included to the recipient of the supply, the Commissioner will exercise the discretion under subsection 105-65(1) of Schedule 1 to the TAA and give the entity a refund for the amount of GST incorrectly included in the price of a non-taxable supply.
Date of decision: 5 July 2006
Legislative References:
Tax Administration Act 1953
section 105-65
ATO ID 2002/1080
Other References:
Law Administration Practice Statement PS LA 2002/12
Keywords
Goods and services tax
GST returns, payments & refunds
GST refunds
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 5 July 2006 | Original statement |
| 20 July 2007 | Archived |