The AAT has dismissed a taxpayer’s appeal and held that the Commissioner was correct to deny it GST refunds for net negative amounts.
Between 1987 and June 2003, the taxpayer conducted a car dealership. As a part of its business, it received hold-back payments made by parties (manufacturers or importers of motor vehicles) from whom it bought motor vehicles. The taxpayer included the hold-back payments in its GST net amount calculations in its BASs. Having regard to the Federal Court decision in KAP Motors Pty Ltd v FCT (2008) 68 ATR 927, the effect of doing so varied so that for some months there was a positive GST net amount reported and a negative GST net amount reported.
Following the KAP Motors decision, and more than 4 years after the period to which the claims relate, the taxpayer sought refunds of GST referrable to the hold-back payments. The Commissioner allowed refunds for tax periods where there was a positive GST net amount, but not for periods where there was a negative GST net amount (citing the operation of s 105-55 of Sch 1 to the Taxation Administration Act 1953).
The appeal concerned whether s 105-55 precluded any entitlement to a payment of amounts the taxpayer would have been entitled to, had it not included the hold-back payments in its BASs. The Tribunal noted that, at all times, s 105-55 limited the right to refunds of negative net amounts. These amounts could only be paid if the Commissioner was notified of the entitlement within 4 years of the period to which the entitlement related. If the taxpayer’s claim was for a payment or refund of a net amount, either wholly or in part, then the claim would be affected by s 105-55. The AAT said that because the negative net refund amounts were amounts that met the terms of s 17-15 and s 35-5 of the GST Act, they were amounts meeting the terms of s 105-55(2)(a) and were therefore affected by the refund limitations of s 105-55(1), thereby denying the taxpayer’s refund entitlements.
(AAT Case [2012] AATA 920, Re Dandenong Motors Unit Trust and FCT, AAT, O’Loughlin SM, Ref No: 2011/4452, 24 December 2012.)
[LTN 245, 18/12]