TOM v FC of T

Members:
Robert Deutsch DP

Tribunal:
Administrative Appeals Tribunal, Sydney

MEDIA NEUTRAL CITATION: [2013] AATA 28

Decision date: 22 January 2013

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Professor Robert Deutsch, Deputy President

1. Pursuant to section 34J of the Administrative Appeals Tribunal 1975, as consented to by the parties, a hearing of this application was dispensed with and a determination was made on the papers.

THE FACTS

2. The Applicant is a director of a company called J.I.T. Australia Pty Ltd.

3. The Applicant also carried on at all relevant times a retailing enterprise known as J.I. Upholstery. This enterprise was not conducted from a store but was nonetheless a retail activity.

4. The Applicant lodged Business Activity Statements (BAS) in his own name for the tax periods ending 30 September 2005 through to 31 December 2006 inclusive ('the relevant tax periods') resulting in GST net amounts of $5,634.

5. On 18 May 2011, the Applicant lodged a number of revised BAS for the relevant tax periods, the result of which was to reduce the net GST amount to nil. These revisions arose largely because a number of directors fees had incorrectly been characterised as business income by the Applicant's accountant and the Applicant's accountant had incorrectly lodged BAS for the relevant tax periods in the Applicant's own name.

6. The result of the revisions was that the Applicant was seeking refunds of approximately $5,560 for the relevant tax periods.

7. After reviewing the Applicant's BAS, the Respondent determined that the Applicant was not entitled to refunds of $5,560 in respect of the revisions to his BAS for the relevant tax periods.

8. On 26 May 2011 the Respondent made assessments in respect of GST net amounts for the relevant tax periods totalling $5,560 and issued Notices of Assessment.

9. On 23 June 2011 the Applicant objected to the assessments and, by notice of objection decision dated 2 September 2011, the Respondent notified the Applicant that he had disallowed the Applicant's objection to the assessments.

10. The Applicant seeks a review of the decision by the Respondent to disallow objections to assessments of GST net amounts of the tax periods ended 30 September 2005 to 31 December 2006.

THE ISSUE

11. The critical issue in dispute here is whether the Applicant is entitled to refunds of GST net amounts totalling $5,560, in respect of the relevant tax periods, if he has not notified the Respondent of his entitlement to those refunds within the time limit of four years stipulated in s 105-55(1) of Schedule 1 to the Taxation Administration Act 1953 ('the TAA').

THE LEGISLATION

12. Section 105-55 of Schedule 1 to the TAA provides a four year time limit on refunds in the following terms:

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 the 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 assessment or otherwise) that you are entitled to the refund, other payment or credit;

• (2) Subsection (1) applies to:
  • (a) a refund in relation to a net amount… in respect of a particular tax period; or
  • (aa) another payment that represents some or all of an amount:
    • (i) that you paid as an amount of * indirect tax payable by you in respect of a particular tax period; and
    • (ii) that exceeded the amount (if any) of such tax that you were liable to pay in respect of that tax period; or
  • (b) an * input tax credit or * fuel tax credit that is attributable to a particular tax period; or
  • (c) a * wine tax credit the amount of which could have been included in a reduction of your * net amount for a tax period under section 21- 15 of the * Wine Tax Act; or
  • (d) a refund of an amount of * indirect tax relating to an importation.
• (2A) A request by you to the Commissioner to treat a document as a * tax invoice for the purposes of attributing a credit to a * tax period is taken to be a notification, for the purposes of paragraph (1)(a), of your entitlement to the credit if:
  • (a) you made the request within the 4 year period referred to in that paragraph in relation to the credit; and
  • (b) the Commissioner agrees to the request (whether or not within that period).

13. Thus, it is clear that the Applicant is only entitled to a refund if he has given the Respondent notice of his entitlement within four years after the tax periods to which such credits relate. The four-year period in respect of each of the relevant tax periods ended on 30 September 2009, 31 December 2009, 31 March 2010, 30 June 2010, 30 September 2010 and 31 December 2010 respectively.

14. The Respondent has indicated that he would accept the lodging of revised activity statements to be notification for the purposes of s 105-55 of Schedule 1 to the TAA, and indeed this position has been confirmed in Miscellaneous Taxation Ruling MTR 2009/1 at paragraph 12.

15. However, the only notice of entitlement to a refund relied upon by the Applicant is the information contained in the revised activity statements, which were lodged by the Applicant on 18 May 2011. Prior to that date, the Applicant did not provide notice to the Respondent of his entitlement to the refund and accordingly, pursuant to s 105-55(1) of Schedule 1 to the TAA, the Applicant is not entitled to the refund.

16. In this context it is worth noting the comments in
Australian Leisure Marine Pty Ltd and Commissioner of Taxation ([2010] AATA 620, where a claim for additional tax credits notified to the Respondent outside the four-year time limit was rejected. In that case Dr McDermott, the presiding member, expressed the following view at [17]:

'In my view, section 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 and FCT (1956) 98 CLR 263.'

17. Further, in
Clontarf Development Pty Ltd and Commissioner of Taxation [2010] AATA 1065, the Tribunal made the following comment at [30]:

'…A claim can only be attributed to one period or another. If the claim is made in respect of a period and that claim fails because it was made more than four years after the tax period ended, that exhausts the claim because the activity statement can no longer be amended'.

18. Furthermore, having perused the wording of and the context of subs 105-55(1) of Schedule 1 to the TAA, it is clear that the Respondent has no discretion to extend the time provided for the Applicant to give notice of its entitlement to claim a refund. This position regarding the exercise of discretion was also confirmed in
Australian Leisure Marine Pty Ltd and Commissioner of Taxation ([2010] AATA 620 at [18].

DECISION

The objection decision under review is affirmed.