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When does the ATO owe interest on overpaid GST?

When does the ATO owe interest on overpaid GST?

Nick Kallinikios and Steven Ren analyse a recent Federal Court decision regarding interest on overpaid GST.


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The Federal Court ruled in Travelex Limited v Commissioner of Taxation [2018] FCA 1051 last week that in determining an entitlement to any delayed refund interest, the relevant date in calculating the interest owing was when the entitlement to a refund arose. This was a date earlier than when the taxpayer gave notice of the overpayment of goods and services tax (GST).

As a result of the introduction of self-assessment for GST with effect from 1 July 2012, the position differs either side of that date. For tax periods after 1 July 2012, this would ordinarily be when the request for an amended assessment is lodged with the Commissioner of Taxation.

However, for tax periods prior to 1 July 2012, this would have been the date that the GST return was due unless either:

  • the Commissioner had exercised his powers under 105-10 to Schedule 1 of the Taxation Administration Act 1953 (Cth) to issue an assessment for the relevant tax period rather than simply paying a refund; or
  • the taxpayer in the GST return lodged was in a net refundable position.

Relevantly, the Federal Court held that while there had been an administrative practice for allowing amended assessments for tax periods prior to 1 July 2012, there was no proper legal or statutory basis for allowing such.

The decision addressed the question of when the period for which interest was payable commenced. The Court held that Travelex was not required to give the Commissioner a notification in respect of the refund to be entitled to the delayed refund interest.

Given the significant implications for all GST returns lodged prior to 1 July 2012, we would expect that the Commissioner of Taxation would seek to appeal this decision. Taxpayers should revisit their determination to and calculations of any delayed interest for periods before 1 July 2012, and apply for a recalculation.

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