Government Draft Legislation for Refunding Excess GST

The Federal Government has released draft legislation to address situations where the Commissioner will refund an overpayment of GST for a second round of public consultation.

The Draft Tax Laws Amendment (2013 Measures No. 2) Bill 2013will amend the A New Tax System (Goods and Services Tax) Act 1999 to clarify circumstances in which the restriction on GST funds applies to overpayment of GST and allows taxpayers to self-assess their entitlement to a GST refund by reference to ascertainable criteria. The draft amendment also addresses the gap in existing law relating to refunds associated with miscalculations of GST payable on supply.

This second consultation exposure draft and explanatory memorandum seeks to address the concerns raised during the first consultation from the 17 August 2012. Substantive changes were made with regards to issues arising from the first consultation such as:

• The 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;

• The restriction on refunds would override the operation of the adjustment provisions;

• 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;

• The Commissioner should be able to retain his discretion to pay refunds where appropriate.

Click here to see the exposure draft.

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