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The ATO has issued a Decision Impact Statement on the decision of the Administrative Appeals Tribunal in a case which concerned whether the taxpayer was entitled to a refund of a net amount: Re Swanbat Pty Ltd and FCT [2013] AATA 891.

On the basis of a favourable private ruling, the taxpayer had lodged a revised GST return claiming refund of GST amounts it had paid on supplies that it had made to an overseas entity. The Commissioner refunded the excess GST, but subsequently changed his mind, advising the taxpayer that it was not entitled to the refund because of the operation of s 105-55 of Schedule 1 to the Taxation Administration Act 1953. Section 105-55 applied because the taxpayer had failed to notify the Commissioner of its entitlement to the refund within four years after the end of the relevant tax period.

The Tribunal agreed with the Commissioner on the application of s 105-55. However, the Tribunal considered that after the Commissioner had provided to the taxpayer the refund to which it was not entitled, it was erroneous for the Commissioner to assess the taxpayer for “GST on sales” corresponding to the refunded amount. Such an assessment was contrary to the private ruling the Commissioner had issued. The assessment was therefore excessive.

Section 8AAZN of the TAA allows the Commissioner to recover administrative overpayments paid by mistake. The Tribunal acknowledged that s 8AAZN was not squarely before it, but noted that the payment of a refund to the taxpayer contrary to s 105-55 may well be a mistake and within the meaning of an “administrative overpayment” as defined in that section.

ATO view of decision

The Commissioner accepts that in cases where he mistakenly refunds an amount to a taxpayer outside of the four year period specified in s 105-55, he should seek to recover the incorrectly paid refund as an administrative overpayment under s 8AAZN of the TAA.

Also consistent with the Tribunal’s decision, it is accepted that in the particular circumstances where a refund is incorrectly paid outside the four year period in s 105-55, it is not appropriate for the Commissioner to seek to recover the incorrectly paid refund by making an assessment of the taxpayer’s net amount that includes GST on sales that are not taxable and/or that excludes input tax credit entitlements for acquisitions or importations that are creditable.

In other contexts, the Tribunal has proceeded on the basis that s 105-55 has substantive effect and that its application is amenable to review by the Tribunal in considering whether an assessment is excessive. Outside of the circumstances addressed in the preceding paragraph, the Commissioner will maintain the view that in the absence of a notice referred to in s 105-55(1), the taxpayer’s net amount cannot be altered by reducing the amount of GST payable or by increasing entitlements to input tax credits for the relevant tax period outside of the four year period specified in s 105-55.


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