Private ruling: Interest on overpayment of GIC 170AA(5A)
Published: November 2013

Ruling: Was the quarterly general interest charge (GIC) paid by Co. A to the ATO in respect of unpaid GIC imposed under former section 170AA(5A) of the Income Tax Assessment Act 1936 (ITAA 1936)? | Yes | If so, will interest be payable to Co. A under section 9 of the T(IOEP)A? | Yes. Interest is payable under section 9(1) of the T(IOEP)A. | Former subsection 170AA(5A) was incorporated into the ITAA 1936 by Act No 11 of 1999, and commenced on 1 July 1999. Former section 170AA was repealed as inoperative by Act No 101 of 2006, s 3 and Sch 1 item 155, effective 14 September 2006. | Former subsection 170AA(5) provided that: | If general interest charge (the primary general interest charge) is payable by a taxpayer under subsection (1), (1A) or (3), the Commissioner may give a notice to the taxpayer specifying a date after which general interest charge will apply under subsection (5A). The specified date must be at least 30 days after the notice is given. | Former subsection 170AA(5A) provided that: | If the primary general interest charge remains unpaid after the day specified in the notice, the taxpayer is liable to pay general interest charge on the unpaid amount. | In a letter from the ATO to the agent the section 170AA interest was $x. This was calculated up to the day that the amended assessment issued. | The Commissioner exercised his discretion under section 255-10 of the TAA and the amount payable under the notice of assessment became due and payable on x date. The letter states that GIC for late payment imposed by subsection 204(3) of the ITAA 1936 would commence to accrue from x date. | We agree with the submission that the GIC applied to the outstanding 170AA GIC, was applied under subsection 170AA(5A) not subsection 204(3), as subsection 204(3) applies GIC to any of the tax or SIC for which a person is liable and which remains unpaid after the time it is due to be paid. | Subsection 9(1) of the T(IOEP)A provides: | Subject to sections 11, 11A and 12 where: | (a) an amount of relevant tax is paid by a person to the Commissioner (in this subsection referred to as the amount paid ); and | (b) as a result of a decision to which this Act applies, the whole or a part of the amount paid is overpaid by the person and is refunded to the person or applied against any liability of the person to the Commonwealth; | interest calculated in accordance with subsections (2) and (3) and sections 10 and 10A is payable by the Commissioner to the person in respect of: | (c) in a case where the whole of the amount paid is so refunded or applied - the amount paid; or | (d) in a case where a part of the amount paid is so refunded or applied - the part of the amount paid so refunded or applied. | General interest charge under former section 170AA of the ITAA 1936 is included in the definition of 'relevant tax' in subsection 3C(1) of the T(IOEP)A. Subsection 3(1)(c)(i) provides that a decision of a court in relation to an objection is a decision to which the act applies. | Consequently, as a result of the decision of the court, the whole of the subsection 170AA(5A) GIC paid under the 50/50 agreement was overpaid. | Therefore, IOP is payable on the overpaid amount of GIC applied under subsection 170AA(5A).




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