Tax Laws Amendment (2014 Measures No. 1) Act 2014 (34 of 2014)

Schedule 2  

Part 1   Main amendments

A New Tax System (Goods and Services Tax) Act 1999

10   At the end of Part 4-4

Add:

Division 142 - Excess GST

Table of Subdivisions

142-A Excess GST unrelated to adjustments

142-B GST related to cancelled supplies

142-C Passed-on GST

142-1 What this Division is about

Excess GST is not to be refunded if this would give an entity a windfall gain.

Note: Refunding excess GST to a supplier will give it a windfall gain if it has already passed on the excess GST in the price of the supply (and not reimbursed the recipient).

Subdivision 142-A - Excess GST unrelated to adjustments

142-5 When this Subdivision applies

(1) This Subdivision applies if, after disregarding any amounts covered by subsection (2), your *assessed net amount for a tax period takes into account an amount of GST exceeding that which is payable.

Note: This Subdivision applies whether or not you have paid, or been refunded, the assessed net amount.

Example: Sunny Co mistakenly reports a negative net amount of $4,000 made up of GST of $10,000 less input tax credits of $14,000. In fact, Sunny Co’s GST should have been $8,000 making its negative net amount $6,000. Sunny Co has excess GST of $2,000.

(2) Disregard the following amounts:

(a) an amount of GST that was correctly payable and attributable to the tax period, but which later becomes the subject of a *decreasing adjustment;

(b) an amount of GST that is payable, but is correctly attributable to a different tax period.

142-10 Refunding the excess GST

For the purposes of each *taxation law, so much of the excess from subsection 142-5(1) (the excess GST ) as you have *passed on to another entity is taken to have always been:

(a) payable; and

(b) on a *taxable supply;

until you reimburse the other entity for the passed-on GST.

Note 1: If you reimburse the passed-on GST so that this section ceases to apply there will be an adjustment event under paragraph 19-10(1)(b) or (c). You will have a decreasing adjustment (see section 19-55) and the other entity may have an increasing adjustment (see section 19-80).

Note 2: Any excess GST you have not passed on will be refunded as described in section 155-75 in Schedule 1 to the Taxation Administration Act 1953.

Note 3: While this section applies, paragraph 11-5(b) (about taxable supplies) is satisfied for the corresponding acquisition by the other entity.

142-15 When section 142-10 does not apply

Commissioner satisfied it is inappropriate for that section to apply

(1) Treat section 142-10 as never having applied to the extent that the Commissioner is satisfied that:

(a) applying that section would be inconsistent with the principle that excess GST is not to be refunded if this would give an entity a windfall gain; and

(b) you have requested a decision under this subsection in the *approved form.

Note: Refusing to make the requested decision is a reviewable GST decision (see Subdivision 110-F in Schedule 1 to the Taxation Administration Act 1953).

(2) The Commissioner must notify you in writing of any decision relating to you made under subsection (1).

If there never was a supply

(3) Treat section 142-10 as never having applied to the extent that:

(a) you treated the excess GST as payable on a supply, but in fact there never was a supply; and

(b) you reimburse the other entity for the *passed-on GST.

Note: If you reimburse the passed-on GST, you will be refunded an equivalent amount as described in section 155-75 in Schedule 1 to the Taxation Administration Act 1953.

So far as it relates to your creditable acquisitions

(4) Section 142-10 does not apply for the purposes of applying subsection 11-15(2) (about creditable purpose) to you.

If the recipient knows you have not paid the excess GST

(5) Section 142-10 does not apply for the purposes of applying a *taxation law to the other entity if, and while, that other entity knows, or could reasonably be expected to have known, that you have not paid the excess GST to the Commissioner.

Note: Section 142-10 still applies for the purposes of applying taxation laws to you.

Subdivision 142-B - GST related to cancelled supplies

142-20 Refunding GST relating to cancelled supplies

(1) This section applies if:

(a) your *assessed net amount for a tax period takes into account an amount of GST on a supply; and

(b) you have a *decreasing adjustment attributable to a later tax period as a result of the cancellation of the supply.

(2) Reduce:

(a) your *decreasing adjustment; and

(b) if the *recipient of the supply has a corresponding *increasing adjustment - the recipient’s increasing adjustment;

to the extent that you have *passed on that GST to the recipient, but not reimbursed the recipient for the passed-on GST.

(3) This section has effect despite sections 19-55 (about decreasing adjustments for supplies) and 19-80 (about increasing adjustments for acquisitions).

Subdivision 142-C - Passed-on GST

142-25 Working out if GST has been passed on

(1) Some or all of an amount of GST may have been passed on to another entity even if:

(a) a *tax invoice is not issued to or by that other entity; or

(b) a tax invoice issued to or by that other entity relates to that GST, but does not contain enough information to enable that GST to be clearly ascertained.

(2) If:

(a) you issue a *tax invoice to another entity, or another entity issues a *recipient created tax invoice to you; and

(b) the invoice contains enough information to enable some or all of an amount of GST to be clearly ascertained; and

(c) in a case where you must pay the *assessed net amount for a tax period to which the invoice relates - you have paid that assessed net amount to the Commissioner;

the invoice is prima facie evidence of that part of that GST having *passed on to that other entity.