Swanbat Pty Ltd and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2013/2025)
Judgment date: 13 December 2013
Date published: 15 April 2015

Summary of decision:
Outlines the ATO's response to this case which concerns whether the taxpayer was entitled to a refund of a net amount, and it makes comments about the Commissioner's approach in raising assessments.

Overview of facts:
Swanbat Pty Ltd (the taxpayer) paid GST on supplies that it made to an overseas entity on a quarterly basis. | On 28 July 2008, the taxpayer lodged a GST return for the quarterly period ending 30 June 2008, reporting GST of $32,098 in respect of its supply of services to a non-resident company. | On 24 August 2012, the taxpayer sought a ruling that the supplies were GST-free. On 19 October 2012, the Commissioner issued a private ruling that the supplies in question were GST-free. | On 28 October 2012, the taxpayer lodged a revised GST return for the June 2008 quarter and on 2 November 2012 the Commissioner refunded an amount equivalent to the excess GST that the taxpayer had paid. | On 7 November 2012, the Commissioner wrote to the taxpayer, advising that it was not entitled to the refund because of the operation of section 105-55 of Schedule 1 to the Taxation Administration Act 1953 (TAA). Section 105-55 [1] applied because the taxpayer had failed to notify the Commissioner of its entitlement to the refund within 4 years after the end of the relevant tax period. | On 13 November 2012, the Commissioner issued an assessment of the net amount for the June 2008 quarter, including the refund amount as GST on sales for which the taxpayer is liable. | The taxpayer objected to the assessment and the Commissioner disallowed the objection. The taxpayer applied to the Tribunal for review of the Commissioner's objection decision. | Issues Decided by the Tribunal | The Tribunal decided that the taxpayer's entitlement to a refund of the net amount it paid in the June 2008 quarter was curtailed by section 105-55 when the four-year limit was reached without notification of entitlement being provided. | However, the Tribunal considered that after the Commissioner had provided to the taxpayer the refund to which it was not entitled, it was erroneous for the Commissioner to assess the taxpayer for 'GST on sales' corresponding to the refunded amount. Such an assessment was contrary to the private ruling the Commissioner had issued. The assessment was therefore excessive. | Section 8AAZN of the TAA allows the Commissioner to recover administrative overpayments paid by mistake. The Tribunal acknowledged that section 8AAZN was not squarely before it, but noted that the payment of a refund to the taxpayer contrary to section 105-55 may well be a mistake and within the meaning of an 'administrative overpayment' as defined in that section.

Issues decided:
The Tribunal decided that the taxpayer's entitlement to a refund of the net amount it paid in the June 2008 quarter was curtailed by section 105-55 when the four-year limit was reached without notification of entitlement being provided. However, the Tribunal considered that after the Commissioner had provided to the taxpayer the refund to which it was not entitled, it was erroneous for the Commissioner to assess the taxpayer for 'GST on sales' corresponding to the refunded amount. Such an assessment was contrary to the private ruling the Commissioner had issued. The assessment was therefore excessive. Section 8AAZN of the TAA allows the Commissioner to recover administrative overpayments paid by mistake. The Tribunal acknowledged that section 8AAZN was not squarely before it, but noted that the payment of a refund to the taxpayer contrary to section 105-55 may well be a mistake and within the meaning of an 'administrative overpayment' as defined in that section.

ATO view of decision:
Consistent with the Tribunal's decision, the Commissioner accepts that in cases where he mistakenly refunds an amount to a taxpayer outside of the 4 year period specified in section 105-55, he should seek to recover the incorrectly paid refund as an administrative overpayment under section 8AAZN of the TAA. | Also consistent with the Tribunal's decision, it is accepted that in the particular circumstances where a refund is incorrectly paid outside the 4 year period in section 105-55, it is not appropriate for the Commissioner to seek to recover the incorrectly paid refund by making an assessment of the taxpayer's net amount that includes GST on sales that are not taxable. | In other contexts, the Tribunal has proceeded on the basis that section 105-55 has substantive effect and that its application is amenable to review by the Tribunal in considering whether an assessment is excessive (see Australian Leisure Marine Pty Ltd and Federal Commissioner of Taxation [2] , Clontarf Developments Pty Ltd and Federal Commissioner of Taxation [3] , Tom and Federal Commissioner of Taxation [4] , and Dandenong Motors Unit Trust and Federal Commissioner of Taxation [5] ). Outside of the circumstances addressed in the preceding paragraph, the Commissioner will maintain the view that in the absence of a notice referred to in subsection 105-55(1), the taxpayer's net amount cannot be altered by reducing the amount of GST payable or by increasing entitlements to input tax credits for the relevant tax period outside of the four year period specified in section 105-55.

Administrative treatment:
Implications for ATO precedential documents (Public Rulings & Determinations etc) | Nil

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 s 7-1 s 7-5 s 7-10 s 7-15 s 9-5 s 17-5 s 17-15 s 33-3 s 33-5 s 35-10 s 195-1 Taxation Administration Act 1953 s 2 s 3AA(1A) s 8AAZA s 8AAZLF s 8AAZN s 14ZZK Taxation Administration Act 1953 Schedule 1 s 105-5 s 105-15 s 105-25 s 105-50 s 105-55 s 105-65 s 155-5 s 155-50 s 166-15 s 250-10 s 255-1 s 350-10 s 359-25 Tax Laws Amendment (2008 Measures No. 3) Act 2008 s 16 of Schedule 2
Case references: Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 [2008] HCA 41 2008 ATC 20-045 69 ATR 357 Deputy Commissioner of Taxation v DeAngelis [2008] SADC 103 Deputy Commissioner of Taxation and Price [2010] QSC 196 79 ATR 137 Federal Commissioner of Taxation v Multiflex Pty Ltd (2011) 197 FCR 580 [2011] FCAFC 142 2011 ATC 20-292 82 ATR 153 Gashi v Commissioner of Taxation (2013) 209 FCR 301 [2013] FCAFC 30 2013 ATC 20-377 (2013) 296 ALR 497 IOOF Holdings Limited v Commissioner of Taxation [2013] FCA 1189 2013 ATC 20-425 Kennedy v Administrative Appeals Tribunal (2008) 168 FCR 566 [2008] FCAFC 124 2008 ATC 20-037 73 ATR 276 Re Australian Leisure Marine Pty Ltd and Commissioner of Taxation [2010] AATA 620 2010 ATC 10-148 76 ATR 390 Re Clontarf Development Pty Ltd and Commissioner of Taxation [2010] AATA 1065 2010 ATC 10-168 79 ATR 540 Re Dandenong Motors Unit Trust and Commissioner of Taxation [2012] AATA 920 2012 ATC 10-288 Re National Jet Systems Pty Ltd and Commissioner of Taxation [2011] AATA 766 2011 ATC 10-212 (2011) 82 ATR 740 Re The Private Tutor and Commission of Taxation [2013] AATA 136 2013 ATC 1-052 Russell v Commissioner of Taxation [2009] FCA 1224 2009 ATC 20-143 74 ATR 466 Re Tom and Commissioner of Taxation [2013] AATA 28 2013 ATC 10-294 87 ATR 360