Time to reform GST legislation, our courts think so

The Full Federal Court savaged our GST legislation on Valentines Day, ruminating on the “extreme difficulties” and the “tortuous journey” their Honours had in navigating the 3 different Legislative Acts just to work out whether a taxpayer is entitled to interest from the ATO on an overpayment.

Justice Steward even called for reform.

The case is called Commissioner of Taxation v Travelex Limited [2020] FCAFC 10.

Travelex mistakenly lodged BASs that declared too much GST liability and requested a refund of the overpayment.

Was Travelex also then entitled to interest on the overpayment?

Justice Steward remarked that surely it cannot be difficult to prepare a set of rules that explains when and how the ATO is to pay interest to a taxpayer in the event of an overpayment.

Despite 3 Acts: GST Act, Tax Administration Act and the Overpayments Act, no such simple rule could be found.

In the end, the Court found that 14 days after the date the ATO allocated the GST credit to the running balance account (RBA), is from when the interest became payable.

What is also worth pointing out is that the interest payable was less than $20k. Yet both sides used top tier law firms, 3 junior barristers and 2 senior counsels. Sounds like an expensive few days in court for all taxpayers.

Will politicians read this and listen?

#lawreform #tax #SVVoidables

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