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Ruling

Subject: GST and refund of GST

Question

In which tax periods are you required to make the changes to 1A and 1B that will give rise to a refund of overpaid GST?

Answer

You are required to revise each activity statement for a number of tax periods.

Relevant facts and circumstances

You are registered for goods and services tax (GST).

You have been registered for GST with effect from 1 July 2000.

You have overpaid GST and overclaimed input tax credits (ITC) as a consequence of treating the supply as a taxable supply.

The correct treatment was confirmed in an ATOID. This ATOID explained that the supply was input taxed financial supply.

You are seeking a refund of the overpaid GST.

You advise that for the tax periods the GST overpaid is in the amount of $X and overclaimed ITC is in the amount of $Y. The net amount for the tax periods is positive. That is you are entitled to a refund.

Our records show that you have notified us in earlier correspondence and we have acknowledged this of your entitlement to the refund within the four year period per section 105-55 of Schedule 1 to the Taxation Administration Act 1953 (TAA).

Section 105-65 of Schedule 1 to the TAA which is about restrictions on refunds does not apply in your circumstances as you are seeking a refund for those members that you have reimbursed and who are not registered or required to be registered for GST.

Relevant legislative provisions

Division 19 of the A New Tax System (Goods and Services Tax) Act 1999

Section 29-20 of the A New Tax System (Goods and Services Tax) Act 1999

Section 105-55 of Schedule 1 to the Taxation Administration Act 1953

Section 105-65 of Schedule 1 to the Taxation Administration Act 1953

Reasons for decision

As stated in the 'facts' in the foregoing section 105-65 of schedule 1 to the TAA does not apply in your circumstances.

You are entitled to the refund which arises as a result of levying GST on an input taxed supply. The amount of the refund of the overpaid GST will be offset by a reduction in ITC overclaimed for the relevant period.

You correctly completed the activity statements for the relevant period. As you have overpaid GST and overclaimed ITC a revision to each of the activity statements would be required to reflect the correct net amount for each of the tax periods.

However, we need to consider whether there is a provision in the GST Act or any other Act or a concession that may allow you to make the changes or some of the changes in a single activity statement.

There are two possibilities of relevance in your situation - adjustment events under Division 19 of the GST Act and where a mistake has been made correcting that mistake on a later activity statement.

Is their a Division 19 adjustment event?

Division 19 of the GST Act provides that adjustments can arise because of adjustment events. Section 19-10 of the GST Act provides inter alia that causing a supply to stop being taxable is an adjustment event.

It provides an example wherein goods that are supplied for export that are not exported within the time provided in section 38-185 of the GST Act are likely to become taxable after originally being a supply that was GST-free.

The present case can be contrasted with this as the supply was always input taxed under the GST Act but was not recognised as such.

Division 19 of the GST Act does not apply and hence a one-off adjustment under section 29-20 of the GST Act cannot be made on a single activity statement.

Is there a mistake?

Taxpayers subject to time and amount constraints may make a correction on a later activity statement where they have made a mistake.

In the present case you have not made a mistake as the earlier Australian Taxation Office's view was applied to treat the supply as taxable which was consistent with the ATOID. This ATOID was subsequently withdrawn.

It was not until the publication of the later ATOID that the GST status of these supplies was determined to be input taxed.

Therefore, you did not make a mistake and cannot use the concessions in the publication Correcting GST mistakes for any of tax periods for which it overpaid GST or overclaimed ITC.

Furthermore, the Commissioner has not exercised his powers of general administration to allow the revisions in relation to the treatment of supply in question to be made in a single activity statement.

Consequently, you need to revise each activity statement for the tax periods.