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30 Mar 15 Four year time limit on entitlement to ITCs – Re Trustee for SBM Trust

The Administrative Appeals Tribunal has held that the effect of amendments to the GST Act enacted in 2010, which imposed a four-year time limit on the making of claims for input tax credits (ITCs), is that if a taxpayer claims ITCs after the commencement date of the amendments, but in circumstances where the ITCs claimed are more than four years old, the ITCs are no longer available even if they relate to creditable acquisitions that were made before the commencement date.

As introduced by an amending Act in 2010, s 93-5 of the GST Act provided:

“(1) You cease to be entitled to an input tax credit for a creditable acquisition to the extent that you have not taken it into account in working out your net amount for:

(a) the tax period to which the input tax credit would be attributable under subsection 29-10(1) or (2); or

(b) any other tax period for which you give to the Commissioner a GST return during the period of 4 years after the day on which you were required to give to the Commissioner a GST return for the tax period referred to in paragraph (a).

Note: Section 93-10 sets out circumstances in which your entitlement to the input tax credit does not cease under this section.

(2) This section has effect despite section 11-20 (which is about who is entitled to input tax credits for creditable acquisitions).”

(The section was subsequently amended, but the amendments were not relevant to this case.)

The commencement date for these amendments was 7.30 pm on 12 May 2009.

The taxpayer in this case lodged BASs for tax periods in 2005 and 2006, showing nil amounts for GST payable and ITCs claimed. Subsequently, in late 2012, the taxpayer purported to revise its BASs to include amounts of GST payable and claiming ITCs. All of the figures included in the revised BASs related to taxable supplies and creditable acquisitions that occurred in those earlier tax periods in 2005 and 2006. There was no dispute that the taxpayer could have legitimately included the figures in the original BASs it lodged in 2005 and 2006.

The Commissioner refused to allow the ITC claims, taking the view that s 93-5 applied to the taxpayer’s circumstances. According to the Commissioner, the taxpayer “cease[d] to be entitled” to the ITCs for the creditable acquisitions as soon as Division 93 became law. That is because, by reference to the language of s 93-5, the taxpayer had not taken the creditable acquisitions into account in working out its net amount for (a) the tax periods to which the ITCs would be attributable under s 29-10(1) or (2) – that is, the quarterly tax periods that ended on 31 March 2005, 30 June 2005 and 30 June 2006; or (b) any other tax period for which it gave the Commissioner a GST return during the period of four years after the due date for those tax periods – 28 April 2005, 28 July 2005 and 28 July 2006.

The Tribunal agreed with the Commissioner. The taxpayer ceased to be entitled to the ITCs because, before 7.30 pm on 12 May 2009, the ITCs had not been included in the BASs for the March 2005, June 2005 or June 2006 quarters or in any of the BASs lodged by the taxpayer during the following four year period.

In any event, as s 29-10(4) of the GST Act makes clear, once the original BASs were lodged without taking into account the creditable acquisitions that could have been included in them, the ITCs were no longer attributable to those tax periods. As a result, the “revisions” of the BASs in late 2012, in an attempt to claim ITCs not included in the original BASs, would not have been effective, even putting s 93-5 to one side.

Re Trustee for SBM Trust and FCT [2015] AATA 174 (Deputy President S E Frost, 26 March 2015).

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