Assistant Treasurer David Bradbury has today released draft legislation for public consultation to implement recommendation 45 of the Board of Taxation’s Review of the Legal Framework for the Administration of the GST.
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.
The same criteria will also apply for refunds associated with miscalculations of GST payable on a supply.
The amendments will protect the integrity of the tax system by ensuring that taxpayers who have passed on an amount of GST to their customers are not able to obtain a windfall gain irrespective of how that overpayment occurs.
"Industry has sought guidance on the precise nature of the Commissioner of Taxation discretion to refund overpaid GST for a number of years," said Mr Bradbury. "These amendments will remove the uncertainty associated with the scope and operation of the current law, as well as the uncertainty about when the Commissioner will exercise his discretion."
This approach is consistent with recent amendments that introduce a self-assessment system for indirect taxes that commenced on 1 July 2012. This allows taxpayers to self-assess their entitlement to a refund of overpaid GST without needing to first ask the Commissioner to exercise his discretion.
The amendments will apply in relation to working out net amounts for tax periods commencing on or after today.
Interested parties are invited to make submissions on the exposure draft legislation and explanatory material by 14 September 2012.
The draft legislation is available at the Treasury website.