Trustee for SBM Trust v Federal Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2013/4747)
Judgment date: 26 March 2015
Date published: 25 August 2015

Summary of decision:
Outlines the ATO's response to this case which concerned whether the applicant was entitled to input tax credits (ITCs) for creditable acquisitions made prior to the commencement of a four year time limit on the claiming of ITCs.

Overview of facts:
1. The taxpayer, which accounted for GST on a cash basis and had quarterly tax periods, lodged its Business Activity Statement (BAS) for the tax periods 31 March 2005, 30 June 2005 and 30 June 2006 on the following respective dates: 29 April 2005, 28 July 2005 and 26 July 2006. | 2. On 15 October 2012, the taxpayer purported to revise its BAS for the June 2005 tax period to claim ITCs for acquisitions made during that period that it had not previously claimed. The Commissioner paid a refund to the taxpayer on 3 November 2012. | 3. On 8 and 10 November 2012 the taxpayer purported to revise its BASs for the March 2005 and June 2006 tax periods to claim ITCs for acquisitions made during those periods that were not taken into account in their previous returns. No refund issued for these purported revisions. | 4. The Commissioner wrote to the taxpayer, advising that it was not entitled to any refunds as it was out of time. The Commissioner issued nil assessments for the 31 March 2005, 30 June 2005 and 30 June 2006 tax periods, placing the taxpayer back into the same position it was in after it lodged the original BASs in 2005 and 2006. | 5. The ITCs that the taxpayer purported to claim in these tax periods related to acquisitions made in the relevant periods. There was no dispute that the taxpayer could have claimed the ITCs when it lodged the original BASs for the relevant periods. | 6. The Commissioner disallowed the objections that the taxpayer lodged against the assessments and the taxpayer applied to the Administrative Appeals Tribunal ('the Tribunal') to review the objection decisions. | Issues decided by the tribunal | Whether section 93-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which was enacted in 2010, applied to impose a time limit on the taxpayer's entitlement to claim ITCs. | The Tribunal decided that the taxpayer was no longer entitled to claim ITCs for the relevant acquisitions, even though the four year time limit imposed by section 93-5 of the GST Act was enacted after the taxpayer acquired the creditable acquisitions. The Tribunal noted that the application clause of the amending legislation provided that Division 93 applied "in relation to acquisitions ….that are taken into account in GST returns given to the Commissioner under the GST Act after 7.30pm AEST on 12 May 2009." The Tribunal found the provision to be unambiguous, and that it is fixing, not on the timing of the acquisition, but on the timing of lodgment of the GST return, or the timing of the assessment. In the taxpayer's case, the acquisitions were taken into account in the revised BASs given to the Commissioner in October and November 2012 (that is, after 7.30pm on 12 May 2009) so section 93-5 applied, and the taxpayer had ceased to be entitled to the ITCs. | The Tribunal also found that subsection 29-10(4) of the GST Act, which deals with attribution, is not in conflict with subsection 93-5, which deals with entitlement. As the Tribunal had found that the taxpayer is not entitled to ITCs, there was no question of attributing the ITCs. The Tribunal also commented at [10] and [38] that, because the taxpayer lodged their returns in 2005 and 2006, without taking into account ITCs that were otherwise attributable to those tax periods (and in circumstances where the taxpayer could have taken them into account), the ITCs were no longer attributable to those tax periods. In these circumstances, in the view of the Tribunal, the taxpayer was not able to revise their returns for the 2005 and 2006 tax periods to claim ITCs that were not taken into account at the time of lodgment of the original returns.

Issues decided:
Whether section 93-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which was enacted in 2010, applied to impose a time limit on the taxpayer's entitlement to claim ITCs.: The Tribunal decided that the taxpayer was no longer entitled to claim ITCs for the relevant acquisitions, even though the four year time limit imposed by section 93-5 of the GST Act was enacted after the taxpayer acquired the creditable acquisitions. The Tribunal noted that the application clause of the amending legislation provided that Division 93 applied "in relation to acquisitions ….that are taken into account in GST returns given to the Commissioner under the GST Act after 7.30pm AEST on 12 May 2009." The Tribunal found the provision to be unambiguous, and that it is fixing, not on the timing of the acquisition, but on the timing of lodgment of the GST return, or the timing of the assessment. In the taxpayer's case, the acquisitions were taken into account in the revised BASs given to the Commissioner in October and November 2012 (that is, after 7.30pm on 12 May 2009) so section 93-5 applied, and the taxpayer had ceased to be entitled to the ITCs. The Tribunal also found that subsection 29-10(4) of the GST Act, which deals with attribution, is not in conflict with subsection 93-5, which deals with entitlement. As the Tribunal had found that the taxpayer is not entitled to ITCs, there was no question of attributing the ITCs. The Tribunal also commented at [10] and [38] that, because the taxpayer lodged their returns in 2005 and 2006, without taking into account ITCs that were otherwise attributable to those tax periods (and in circumstances where the taxpayer could have taken them into account), the ITCs were no longer attributable to those tax periods. In these circumstances, in the view of the Tribunal, the taxpayer was not able to revise their returns for the 2005 and 2006 tax periods to claim ITCs that were not taken into account at the time of lodgment of the original returns.

ATO view of decision:
The Commissioner considers that the Tribunal's decision confirms that section 93-5 of the GST Act imposes a time limit on a taxpayer's entitlement to claim ITCs for GST returns lodged, or assessed, from 12 May 2009, regardless of when the relevant acquisitions were made. It follows that, if a taxpayer is not entitled to claim ITCs, as the four year time limit has passed under section 93-5 of the GST Act, then there can be no attribution of those ITCs under subsection 29-10(4). | The Commissioner respectfully notes that the Tribunal's comments at [10] and [38] about the operation of subsection 29-10(4) of the GST Act were not necessary to resolution of the issue in dispute in this case. The Commissioner further notes that submissions were not made by either party on revisions being made to an assessment to take into account an ITC. Until there is a suitable opportunity to have this matter further considered by a Tribunal or Court, the Commissioner proposes to maintain his existing view that subsection 29-10(4) of the GST Act does not prevent an entity revising an earlier GST return to claim an ITC that the entity is otherwise entitled to claim.

Administrative treatment:
Implications for impacted ATO precedential documents (Public Rulings, Determinations, ATO IDs) | Nil | Implications for impacted Law Administration Practice Statements | Nil

Legislative references: A new Tax System (Goods and Services Tax) Act 1999 29-10(4) 93-5
Case references: Clontarf Development Pty Ltd and Commissioner of Taxation [2010] AATA 1065 2010 ATC 10-168 [2011] ALMD 3831 (2010) 79 ATR 540 Australian Leisure Marine Pty Ltd and Commissioner of Taxation [2010] AATA 620 2010 ATC 10-148 (2010) 76 ATR 390 [2010] ALMD 7501 Swanbat Pty Ltd and Commissioner of Taxation [2013] AATA 891 2013 ATC 10-344
Subject references: GST Input tax credits Creditable acquisitions