AUSTRALIAN LEISURE MARINE PTY LTD v FC of T

Members:
DR P McDermott R F D SM

Tribunal:
Administrative Appeals Tribunal, Brisbane

MEDIA NEUTRAL CITATION: [2010] AATA 620

Decision date: 20 August 2010

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Dr P McDermott, RFD, Senior Member

Introduction

1. Australian Leisure Marine Pty Ltd seeks to claim additional input tax credits relating to GST on creditable importations. I give my reasons why I consider that the right of the applicant to claim those additional tax credits was extinguished by the operation of s 105-55(1) of Sch 1 to the Taxation Administration Act 1953 (Cth) ("the Act").

Background

2. There is no dispute concerning the facts that relate to this application. In the relevant tax periods the applicant carried on an enterprise which included the importation of goods into Australia. There is no doubt that the applicant made an error in calculating its entitlement to input tax credits which were claimed in its original Activity Statements. The applicant first became aware of this error in 2005 when their accountant advised that there was plenty of time to remedy the situation. It was, however, not until 6 August 2009, when the applicant lodged revised Activity Statements for the relevant tax periods increasing its claims for input tax credits on creditable importations from $640,289 to $746,602^[1] Respondent's Statement of Facts, Issues and Contentions .

3. On 21 September 2009, the Commissioner of Taxation ("the Commissioner") made a Notice of Assessments of the net amounts for the quarterly tax periods for the tax periods from 1 July 2002 to 30 June 2005. The Commissioner has ruled that the applicant was not entitled to the additional input tax credits because of the operation of s 105-55(1) of Schedule 1 to the Act.

4. On 20 November 2009, the applicant lodged an objection to the notice of assessments. The Commissioner has not taken exception to certain aspects of the objection of the applicant. In my view, this is an appropriate course of action. On 2 December 2009, the Commissioner made a decision which disallowed the objection.

5. The applicant has made an application in this Tribunal to review the decision of the Commissioner.

Creditable importations

6. The last creditable importations that are under consideration occurred on 13 May 2005^[2] ST2/124 , 8 June 2005^[3] ST3/136 , 22 June 2005^[4] ST4/147 and 11 July 2005.^[5] ST5/159 Entry forms of Customs show the dates that GST was paid for the last four importations as being 19 May 2005^[6] ST2/123 , 8 June 2005^[7] ST3/135 , 28 June 2005^[8] ST4/146 and 12 July 2005^[9] ST5/158 respectively. Apart from the latter importation for which GST was paid on 12 July 2005 and which is attributable to the tax period ending on 30 September 2005, the input tax credits are attributable to the relevant tax periods.

7. This latter importation was not attributable to the tax periods covered by the objection and will not be the subject of this decision. However, as notification of the additional input tax credits was made within four years of the tax period ending on 30 September 2005, the Commissioner will in due course examine the allowance of the additional input tax credits for the latter importation.

Relevant legislation

8. It may be helpful to the appellant, who was not legally represented at the hearing of this application, if I explain that the liability to pay GST does not depend upon an assessment of the Commissioner. Rather GST is imposed upon an entity that makes a taxable supply or taxable importation by the force of s 9-40 of A New Tax System (Goods and Services Tax) Act 1999 (Cth). That Act also imposes an obligation on that entity to regularly account to the Commissioner, usually on a monthly or quarterly basis, by ascertaining the net amount (s 17-5) by offsetting entitlements to input tax credits against GST payable.

9. Even though GST is a tax which is imposed on transactions, the Commissioner can make an assessment of the net amount for a particular tax period. The net amount determines the applicant's legal obligation to pay GST or their entitlement to be paid a refund^[10] ss 35-3, 35-5 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) . There is force in the submission of the Commissioner that s 105-55 of Sch 1 to the Act should be read together with the A New Tax System (Goods and Services Tax) Act 1999 (Cth) as part of a legislative scheme concerned with determining an entity's legal obligation to pay GST or its entitlement to be paid a refund as reflected in the net amount. This is because the collection and recovery of GST is provided for by the Act.

10. Section 105-55 of Sch 1 to the Act provides:

• 105-55 Time limit on refunds etc from the Commissioner
  • (1) You are not entitled to a refund, other payment or credit to which this subsection applies in respect of a *tax period or importation unless:
    • (a) within 4 years after:
      • (i) the end of the tax period; or
      • (ii) the importation;

    as the case requires, you notify the Commissioner (in a *GST return or otherwise) that you are entitled to the refund, other payment or credit; or

    …

  • (2) Subsection (1) applies to:
  • …
    • (b) an *input tax credit … that is attributable to a particular tax period; or
  • …
    • (d) a refund of an amount of *indirect tax relating to an importation.
  • …

11. The Commissioner has conceded that the additional input tax credits were in respect of creditable importations as that term is defined in A New Tax System (Goods and Services Tax) Act 1999 (Cth): see s 15-5. That Act provides that an entity is entitled to the input tax credit for any creditable importation that it makes: s 15-15. This entitlement is attributable to the tax period in which the GST was paid on the importation: s 29-15(1) of A New Tax System (Goods and Services Tax) Act 1999 (Cth).

Consideration

12. The applicant is only entitled to a credit for the additional input tax credits that are in issue if it has given the Commissioner notice of its entitlement within 4 years after the tax periods or the importations to which such credits relate. This is a consequence of the operation of s 105-55 of Schedule 1 to the Act. This subsection applies to an input tax credit that is attributable to a particular tax period: s 105-55(2) of the Act.

13. The Commissioner has accepted that the lodging of revised Activity Statements constitutes notification for the purposes of s 105-55 of Sch 1 to the Act.^[11] See Miscellaneous Tax Ruling 2009/1 at para 12

14. The only notice of an entitlement to the additional input tax credits that is relied on by the applicant is the revised activity statements lodged by the applicant on 6 August 2009. The applicant certainly did not provide notice to the Commissioner of its entitlement to the additional input tax credits prior to 6 August 2009. I accordingly find that on 6 August 2009 the applicant gave notice to the Commissioner of the input tax credits.

15. In my opinion the operation of s 105-55(1) of Sch 1 to the Act leads to the consequence that the applicant is not entitled to the additional input tax credits. Customs records disclose that GST was paid on 28 June 2005, which is the last importation which is raised in the objection. The end of the tax period in which that payment was made was 30 June 2005. A period of more than four years has elapsed between when the GST was paid and the revised Activity Statements were lodged by the applicant. The applicant has not given notice of those additional tax records within 4 years after the end of the tax period or the importation and is not entitled to the additional input tax credits.

16. I might make some observations on the imposition of time limits by statute. As Windeyer J remarked in
Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471 at 488 such provisions "take various forms and have different purposes". The time limit which is imposed by s 105-55 of Sch 1 to the Act has in my view substantive effect and is not merely a procedural matter. As Mason CJ, Brennan, Dawson, Deane and Gaudron JJ explained in
Deputy Federal Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55 at 65, to speak of a limitation provision as imposing merely a "procedural" bar can be descriptively misleading since some limitation provisions will "entail consequences which are substantive in that … they will effectively extinguish both rights and liabilities."

17. In my view, s 105-55 of Sch 1 to the Act has substantive effect in that the expiry of the four year time limit extinguishes the right of a taxpayer to notify the Commissioner of an entitlement to the input tax credit. As such the provision certainly denies the entitlement of an entity to an input tax credit. The High Court of Australia has also recognised that taxation legislation which imposes time limits on amending an income tax assessment to have substantive rather than procedural operation: see
McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263.

Whether there is discretion to extend the time period

18. The Commissioner (and this Tribunal) has, in my view, no discretion to extend the time which is provided for by s 105-55(1) of Sch 1 to the Act in which the applicant may give notice of its entitlement to claim the additional input tax credits.

Decision

19. I affirm the decision of the Commissioner dated 2 December 2009.