The ATO on Thur 1.8.2013, released Practice Statement Law Administration PS LA 2013/3 (GA) to explain the circumstances in which the Commissioner will use his powers of general administration to allow a recipient to retain an input tax credit that it has claimed where a transaction was incorrectly treated by a supplier as giving rise to a taxable supply.
Generally, the PS LA applies to circumstances where:
- a supply has incorrectly been treated as taxable to any extent;
- the supplier is registered for GST and has overpaid GST;
- the supplier has issued a tax invoice to the recipient;
- the recipient has over-claimed an input tax credit and would have been entitled to claim that input tax credit if the supply had been a taxable supply;
- the recipient has treated the acquisition as a creditable acquisition when applying other taxation laws such as the income tax law and the FBT law;
- should the supplier request a refund, s 105-65 of the TAA would apply such that the Commissioner need not refund the supplier the overpaid GST; and
- the Commissioner has not given a refund of the overpaid GST to the supplier.
According to the PS LA, where the factors listed above are met, the Commissioner will generally not require the recipient to repay the over-claimed input tax credit or pay any GIC related to the over-claimed input tax credit (ie preserving the status quo approach).
[LTN 147, 1/8/13]