On 4.7.19, the Government introduced the Treasury Laws Amendment (Combatting Illegal Phoenixing) Bill 2019 into the House of Representatives (see related Tax Technical article).  The Bill measures that impact GST – allowing the Commissioner to collect ‘estimates’ of GST, making directors liable for GST and further reasons to delay GST refunds.

See below for a summary of these measures.

FJM 6.7.19

[Tax Month – July 2019]

 


 

Recovering estimates of GST (‘net amounts’)

The Commissioner currently has the power in Division 268 of Schedule 1 to the Taxation Administration Act (TAA53) to make estimates of an entity’s liability to pay PAYG withholding and superannuation guarantee charge and to recover the amount of those estimates from taxpayers. A taxpayer becomes liable to pay an estimate when the Commissioner gives notice of the estimate to the taxpayer.

The Bill proposes to extend the estimates regime to include an entity’s “net amount” under the GST Act. Because an entity is not under an obligation to pay a net amount until it has been assessed (either by the lodgement of an activity statement or the making of an assessment by the Commissioner), the proposed amendments will deem the estimated net amounts to be payable. Further, the net amount is deemed to be payable on the day that the entity was required to lodge its GST return.

  • The amendments will apply to the first tax period after the date of royal assent.

Director Penalty Notices for GST

The director penalty regime in Division 269 of TAA53 makes directors of a company personally liable for specified taxation liabilities of the company in certain circumstances of non-payment by the company. The regime presently includes PAYG withholding, superannuation guarantee charges and estimates of those amounts made by the Commissioner under Division 268.

The Bill proposes to extend the regime to include a company’s unsatisfied liabilities to pay net amounts and GST instalments, including estimates of those amounts made by the Commissioner.

It will be a defence if the director was unable to comply with the obligation due to illness or other good reason, or that the director took all reasonable steps to comply with the obligation. It will also be a defence if the company adopted a reasonably arguable position and the company took reasonable care.

  • The amendments will apply to the first tax period after the date of royal assent.

Retention of GST refunds

The Commissioner is currently authorised to retain refunds where the taxpayer has failed to provide a BAS (s 8AAZLG of the TAA53) or where the Commissioner is verifying information provided by the taxpayer (s 8AAZLGA). The Bill proposes to extend the circumstances in which the Commissioner may retain refunds to include where the taxpayer has failed to lodge a return (such as an income tax return) or provide other information that may affect the amount of the refund.

  • The amendments will apply to refunds the Commissioner is otherwise required to pay on or after the date of royal assent.

[Sievers: Phoenixing article; Tax Month – July 2019]

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