Private ruling: GST and restriction on refund of overpaid GST
Published: September 2014
Ruling period: August 2014 onwards

Ruling: Q1: Will restrictions apply to over paid goods and services tax (GST) applied to Education Courses collected for a relevant period? | A1: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. • You are registered for GST. • You provide education courses for students. • You provide 4 levels of study. • Students comprise of individuals from overseas. • All tax invoices issued to enrolled students were GST-free. • Your accounting system was incorrectly set-up for your business reporting in relation to language education courses. • Education courses were incorrectly coded as GST Payable. • You have advised that this incorrect coding has been in place for a relevant period. • You have provided the following figure of $xx detailing the total amount of GST reported on your business activity statement (BAS) during the relevant periods. • You have advised that the GST overpayments have been reported in your quarterly activity statement (BAS).

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Division 38 GST-free supplies | Taxation Administration Act 1953 Section 105-65 to Schedule 1 | Divisions 3 and 3A of Part IIB | section 8AAZLF

Reasons for decision: Summary: Under the general rules the Commissioner is required to give a refund or apply that amount in accordance with the running balance account provisions in Divisions 3 and 3A of Part IIB of the Taxation Administration Act 1953 (TAA). However, the requirement to give a refund of overpaid GST is subject to section 105-65 of Schedule 1 to the TAA (section 105-65) which modifies the general rules so that the Commissioner need not give a refund or apply that amount if an entity overpaid its net amount or an amount of GST where the requirements of the section are satisfied. Section 105-65 applies to restrict refunds of overpaid GST if all three of the following conditions are satisfied: • there was an overpayment of GST • a supply was treated as a taxable supply when it was not a taxable supply or was taxable to a lesser extent, and • the recipient has not been reimbursed a corresponding amount of the overpaid GST and/or the recipient of the supply is registered or required to be registered for GST. In the context of the first point in subsection 105-65(1), 'overpaid' means the amount that has been remitted must be in excess of what was legally payable on the particular supply in the relevant tax period prior to taking into account or applying section 105-65. The supply of an education course is GST-free under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). An education course is defined in section 195-1 of the GST Act. You have provided evidence that the supply of your education course to overseas students was treated as GST-free under section 38-85 of the GST Act. Due to a miscoding in your accounting system, 1/11 th of English course supply was captured for GST and consequently remitted in your BAS. Based on the information and evidence provided, subsection 105-65 would not apply because: Your accounting system was incorrectly set up to capture GST as 1/11 th of education supplies on the basis that all education supplies were a taxable supply for GST purposes". • You have mischaracterised the supplies of education services to non-resident recipients as taxable supplies. • No GST should have been payable on the education course, the amount legally payable was nil and you have overpaid a GST amount in relation to those supplies. • Your students were not charged GST when invoiced for the education course. • The non-resident recipients are generally not registered or required to be registered for GST. As section 105-65 does not apply, the Commissioner has an obligation to pay a refund payable under section 8AAZLF of the TAA. | Detailed Reasoning - Private Binding Ruling Facts: This Private Binding Ruling is given on the basis of the facts stated above. Any material variation from these facts (including any matters not stated in the description, or any departure from these facts) may mean that the Private Binding Ruling has no effect. | Detailed Reasoning - The 4 year time limit: Due to the '4 Year Rule' and based on your letter, the period of review has been affected. An amended figure would be needed for a particular financial period ($x) as this is a yearly total figure.