On 26 February 2013, the Assistant Treasurer released exposure draft legislation to address some of the issues raised in relation to the first ED legislation to replace section 105-65 of Schedule 1 of the Taxation Administration Act 1953.  The first ED proposed a new Division 36 into the GST Act.

The amendments in relation to this revised ED will apply at the originally announced date – i.e., in relation to working out net amounts for tax periods commencing on or after 17 August 2012.

The AT said of the revised ED:

The draft legislation clarifies the circumstances in which the restriction on GST refunds applies to overpayments of GST and allows taxpayers to self-assess their entitlement to a GST refund by reference to ascertainable criteria. It also addresses a gap in the existing law relating to refunds associated with miscalculations of GST payable on a supply.  …

That first consultation highlighted a number of concerns with the draft legislation. The main issues raised in the first consultation round included the following:

• the perceived inability to obtain a refund of overpaid GST would encourage taxpayers to shy away from adopting a conservative approach to their GST obligations;
• a concern that rights to object to an assessment of GST would be removed as the relevant assessment would not be excessive as section 36-5 would deem the GST to have always been payable;
• the restriction on refunds would override the operation of the adjustment provisions resulting in businesses not being able to get a refund in their dealings with other businesses;
• the concept of passing-on was introduced without being adequately defined creating considerable uncertainty;
• recipients that have excess GST passed on to them may not have an entitlement to an input tax credit on the excess GST as it may not be consideration for a taxable supply and therefore would not be a creditable acquisition for the purposes of Division 11; and
• the Commissioner should be able to retain his discretion to pay refunds where appropriate e.g. where a taxpayer does not satisfy the requirements of Division 36 but there is no windfall gain to the taxpayer.

A link to the Treasury website, ED Bill and explanatory Memorandum is here

It may be of interest to some you that at TEN’s 1^st GST Conference at the Gold Coast last year, Jeremy Geale (KPMG) was scheduled to talk about proposed self assessment amendments – they were introduced a day before his session was to be presented.  Further amendments dealing with the Multiflex case were introduced on the morning of his session.

The 2^nd TEN GST conference commences on 28/2/13 at Palazzo Versace in the Gold Coast.

Gina Lazanas and Robyn Thomas (Balazs Lazanas & Welch LPP, Sydney) are scheduled to present a session on the topic of these latest refund EDs on the afternoon of 28/2/13.

It suggests that the program for the TEN conference is a prompt for amendments and EDs to be released.