The Commissioner released Draft GST Determination GSTD 2016/D1, on Wed 23.3.2016. It considers whether Div 142 of the GST Act (about restrictions on GST refund) can apply to prevent refunds of incorrectly imposed increasing adjustments for supplies and concludes it can.
Under Div 142, a supplier is generally not entitled to a refund of overpaid GST until the supplier has reimbursed the recipient for any overpaid GST passed on to the recipient. This ensures that the supplier does not get a benefit where the recipient has borne the cost of the GST.
The Commissioner’s preliminary view is that an increasing adjustment for a supply (under s 19-50 of the GST Act) can give rise to an amount of excess GST for Div 142 purposes. Accordingly, if the supplier’s assessed net amount incorrectly takes into account the increasing adjustment, the Commissioner considers that Div 142 will apply, to prevent a refund of the excess GST, if the excess has been passed on to the recipient and the supplier has not reimbursed the recipient.
The Commissioner took the same view in a technical discussion paper, GST adjustments and windfall gains, released in May 2015. That paper also provided that Div 142 does not apply to decreasing adjustments for supplies (unless the supply was cancelled), and to increasing or decreasing adjustments for acquisitions.
When the final Determination is issued, it is proposed to apply both before and after its date of issue. Comments on the Draft are due by 22 April 2016.
[LTN 56, 23/3/16]
Extracts from the A New Business Tax System (Goods and Services Tax) Act 1999
142-5 When this Subdivision applies
GST : means tax that is payable under the *GST law (which includes the above Act).