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ATO Interpretative Decision

ATO ID 2002/1080 (Withdrawn)

Goods and Services Tax

GST and refunds of GST incorrectly included in the price of non-taxable supplies
FOI status: may be released
  • This ATO ID is withdrawn and is replaced by ATO ID 2006/175

    Reason
    This ATO Interpretative Decision is withdrawn from the database because it contains a view in respect of subsection 39(3) the Tax Administration Act 1953 (TAA). Subsection 39(3) of the TAA has been repealed and consequently doesn't apply after the 30 June 2006. Despite its withdrawal from the database, this ATO Interpretative Decision continues to be a precedential view in respect of refunds up to, and including, 30 June 2006.
    See ATO Interpretative Decision [ 2006/175 - GST and refunds of GST incorrectly included in the price of non-taxable supplies from 1 July 2006], which reflects the view in respect of subsection 105-65(1) in Schedule 1 to the TAA. Subsection 105-65(1) replaces subsection 39(3) of the TAA for refunds after 30 June 2006.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is the Commissioner required by law to give the entity, a business operator, a refund under subsection 39(3) of the Taxation Administration Act 1953 (TAA), when the entity:

•
incorrectly included goods and services tax (GST) in the price of a non-taxable supply to a recipient that is registered for GST; and
•
has reimbursed the recipient for the amount of GST incorrectly included?

Decision

No, the Commissioner is not required by law to give the entity a refund under subsection 39(3) of the TAA when the entity:

•
incorrectly included GST in the price of a non-taxable supply to a recipient that is registered for GST; and
•
has reimbursed the recipient for the amount of GST incorrectly included.

However, the Commissioner will exercise the discretion provided in section 39 of 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 39(3) of 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:

•
the Commissioner is satisfied that the supplier has reimbursed the GST incorrectly included in the price to the recipient of the supply; and
•
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 39(3) of 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 39(3) of 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..

Practice Statement PS 2002/12 outlines the Australian Taxation Office's (ATO) policy in relation to the exercise of the discretion in subsection 39(3) of 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 39(3) of 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:  23 April 2002

Legislative References:
Taxation Administration Act 1953
   subsection 39(3)

Other References:
PS 2002/12

Keywords
Goods and services tax
GST returns, payments & refunds
GST refunds

Business Line:  GST

Date of publication:  30 November 2002

ISSN: 1445-2782

history
  Date: Version:
  23 April 2002 Original statement
You are here 21 July 2006 Archived

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