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Australia – February 2014 GST Developments.

13 March, 2014

 

Legal News & Analysis – Asia Pacific – Australia – Tax

 

What You Need To Know

 
This Bulletin outlines Australian GST developments in February 2014, which may impact your business, including:

 

Relevant area

 

At a glance Relevant to

 

Division 75 – Sale of freehold interests

 

GST Determination GSTD 2014/2 – Does the call option fee in the purchase of real property count towards the consideration of the acquisition for the purposes of s75-10(2) of the GST Act.

 

Acquirers of real property

 

S 105-65 of Schedule 1 to the TAA

 

Draft Exposure Legislation – Refunding excess GST – the third draft of the new legislation does little to clear up a lingering deficiency in GST law.

 

All taxpayers

 

Various Addenda, erratum and withdrawals of GST Rulings this month. All taxpayers

 

 

GST Determination GSTD 2014/2

 
GSTD 2014/2 was released on 5 February 2014 regarding situations in which real property is acquired following the exercise of a call option, for the purposes of calculating the margin where the margin scheme is applied to the transfer of the property.

 
The determination states that the call option fee does not form part of the consideration for the acquisition for the purposes of s 75-10(2) of the GST Act.

 
Exposure Draft Legislation – Refunding excess GST

 
Treasury has released exposure draft Tax and Superannuation Laws Amendment (2014) Measures No 2) Bill 2014: Refunding Excess GST. The bill updates the changes proposed in Tax Laws Amendment (2013 Measures No 4) Bill 2013 which lapsed when parliament was prorogued on 5 August 2013. The amendment is intended to clarify the circumstances in which the restriction on GST refunds apply to overpayments of GST.

 
There are some changes to the new draft legislation, including providing taxpayers with the right to review decisions made under s 105-65 of Schedule 1 to the TAA, and clarifying that tax invoices are only prima facie evidence of an amount being passed on to the extent that the GST has been paid to the commissioner. These changes will also now only apply on a prospective basis, whereas previously they were to have applied from 17 August 2012.

 
The new s 142-10 provides that excess GST that has been passed on to another entity is taken to have always been payable and always a taxable supply, until reimbursed to the other entity.

 
There are two relevant scenarios:

 
(a) if the excess GST has not been passed on – Division 142 will not apply and a refund will need to be obtained under s 155-75 of Schedule 1 to the TAA; or
(b) if the excess GST has been passed on – taxpayer would be entitled to a Division 19 adjustment in relation to the excess GST if the excess GST has been reimbursed to the recipient.

 
However, where an amount of excess GST has been passed on, the Commissioner does have the discretion to refund (as opposed to the discretion not to refund) the excess GST amount, as long as it is not inconsistent with the principle that an entity should not obtain a windfall gain from the refund.

 
Addenda, Erratum And Withdrawals Of GST Rulings This Month

 
The Commissioner has issued an addendum to Miscellaneous Taxation Ruling MT 2010/1, which deals with restrictions on GST refunds under s 105-65 of Schedule 1 to the Taxation Administration Act 1953 (TAA). The addendum amends the ruling to reflect:

 
(a) the Tribunal’s decision in Naidoo v Commissioner of Taxation [2013] AATA 443; and
(b) amendments made by the Indirect Tax Laws Amendment (Assessment) Act 2012, which came into effect on 1 July 2012 and introduced a self-assessment regime for indirect taxes.

 
The Tax Office has withdrawn ATO ID 2012/78: GST and supplies made by endorsed charitable institutions for nominal consideration. The ATO ID is being withdrawn because the current ATO position on this issue is contained in GST Determination GSTD 2013/4.

 
The ATO has withdrawn the following GST Advices with effect from 26 February 2014 as it says they are no longer required:

 
(a) GSTA TPP 012: Is a landlord who is renting furnished premises to tenants required to apportion the rent between the occupancy of the real property and the right to use the furnished items?
(b) GSTA TPP 018: Can an interest change in consideration and therefore an adjustment event (as opposed to a financial supply)?

 

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For further information, please contact:

 

Geoffrey Mann, Partner, Ashurst
geoffrey.mann@ashurst.com

 

Jadie Teoh, Ashurst
jadie.teoh@ashurst.com

 

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