ATO Interpretative Decision
ATO ID 2001/101
Goods and Services Tax
GST: Stolen TakingsFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Can the entity's 'net amount' be decreased under subsection 17-5(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when all of its takings are stolen?
Decision
No, the entity's 'net amount' cannot be decreased under subsection 17-5(2) of the GST Act when all of its takings are stolen. The 'net amount' remains unaltered.
Facts
The entity is a social club operator and is registered for goods and services tax (GST).
The entity conducts a social event and receives proceeds from gate takings, souvenir and bar sales. All the supplies, for which these proceeds are consideration, are taxable supplies under section 9-5 of the GST Act. The entity does not make any other taxable supplies in the tax period.
All the proceeds from the social event were stolen in a burglary.
The entity lodges a claim under its insurance policy to recover some of the amount that was stolen.
Reasons For Decision
The amount that is payable by an entity to the Commissioner (or payable to the entity) for a particular tax period is the entity's 'net amount' for that tax period.
The entity's net amount for a tax period is worked out under section 17-5 of the GST Act by using the following formula:
GST - Input tax credits
where:
'GST' is the sum of all the GST (that is attributable to the tax period) for which the entity is liable on the taxable supplies that it makes; and
'Input tax credits' is the sum of all the input tax credits (that is attributable to the tax period) to which the entity is entitled for the creditable acquisitions and importations that it makes.
Under section 9-40 of the GST Act, the entity must pay the GST payable on any taxable supply that it makes. The amount of GST on a taxable supply is 10% of the value of the supply (section 9-70 of the GST Act). The value of a taxable supply is defined in subsection 9-75(1) of the GST Act and is equal to 10/11th of the price of the supply (or, as the consideration for the supply is expressed as an amount of money, 10/11th of the consideration for the supply).
As all the supplies that the entity makes are taxable supplies under section 9-5 of the GST Act, the sum of all the GST for which the entity is liable in the tax period is 10% of 10/11th of the consideration or proceeds it receives from the social event (or expressed another way, 1/11th of the total consideration received). This amount will form part of the net amount under section 17-5 of the GST Act.
Subsection 17-5(2) of the GST Act provides that the net amount for the tax period may be increased or decreased by any adjustments for the period. Under section 17-10 of the GST Act, the entity may decrease its net amount by subtracting the sum of any decreasing adjustments (if any) that are attributable to the tax period from the net amount.
A decreasing adjustment is defined under section 195-1 of the GST Act to mean an amount arising under one of the provisions listed in that definition. Stolen takings do not give rise to a decreasing adjustment under any of these provisions. Therefore, the entity's net amount under Division 17 of the GST Act remains unaltered despite the fact that all of the takings are stolen.
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
section 9-40
section 9-70
subsection 9-75(1)
Division 17
section 17-5
subsection 17-5(2)
section 17-10
section 78-50
section 195-1
Other References:
Transport and Taxi - Industry Partnership - Taxi Industry Partnership Issues Register- Issue Resolved 23/05/00
Keywords
Goods and Services Tax
GST net amounts & adjustments
Adjustment events
Adjustments
Net amounts
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 6 April 2001 | Original statement |
| 5 April 2013 | Updated statement |