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Edited version of your written advice
Authorisation Number: 1051349409079
Date of advice: 14 March 2018
Ruling
Subject: GST and Division 142
Question
Can you get a refund under Division 142 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for the excess GST you have paid for the supply of personal aquatic survival skills courses?
Decision
No, you cannot get a refund under Division 142 of the GST Act for the excess GST you have paid for the supply of personal aquatic survival skills courses.
Relevant facts and circumstances
Our decision is based on the following facts.
You made supplies of GST-free aquatic survival skills courses as per section 38-85 of the GST Act.
You treated these supplies as taxable supplies and made a confirmation as to the GST treatment of these supplies by way of a private ruling.
You requested a refund under Division 142 of the GST Act.
Relevant legislative provisions
Division 142 of the A New Tax System (Goods and Services Tax) Act 1999
Reasons for decision
Division 142 of the GST Act provides that an excess amount of GST will not be refunded where that refund would results in a windfall gain for an entity. Effectively, a supplier is not entitled to a refund of an amount of excess GST where the supplier has passed on the GST to another entity (the recipient) and has not reimbursed that other entity for the passed on GST.
It is usually assumed that when a supplier is making a taxable supply the GST is passed on to the recipient. Goods and Services Tax Ruling GSTR 2015/1 discusses the meaning of passing on in the context of Division 142.
Paragraph 25 of GSTR 2015/1 provides that if excess GST is included on a tax invoice, this is prima facie evidence that the excess GST has been passed on.
Paragraph 41 of GSTR 2015/1 provides:
41. Where a supplier sets a price with the knowledge or belief that the transaction is subject to GST, including a belief that the GST which later proves to be an overpayment is a real cost of doing business, that will point towards a finding that the excess GST has been passed on.
In your case, you did have a GST component included on the tax invoice you provided to your recipients. This is because you were of the belief that the supplies were taxable supplies. When you became aware that the supplies were GST-free supplies you reduced the price of your supplies for the amount of the GST and then increased the price to take into account the CPI. This suggests that the GST was passed on to the recipients.
Therefore, it is considered that you have passed on the GST to your recipients and as you have not refunded them the GST component you would not be entitled to a refund for the excess GST as per Division 142 of the GST Act.
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