IGOT to review GST refund verification

The Inspector-General of Taxation (IGOT), has announced the terms of reference for his review into the Australian Taxation Office's (ATO) Goods and Services Tax (GST) refund verification process. The review focuses on the GST refund verification process and:

·       its accuracy in detecting incorrect or fraudulent claims,

·       engagement with affected taxpayers and their representatives throughout the process, including timely notification of the retention, the reasons for it and rights of review as well as the appropriateness of any information requests and effectiveness of resolution mechanisms,

·       its interaction with other ATO compliance processes triggered due to other risks being identified or because the taxpayer is involved in certain industries,

·       the time required to conduct verification activities and opportunities to expedite the process through, for example, pro-actively providing information to the ATO, and

·       the impact on taxpayers and their representatives when considered against resulting adjustments, as well as the ATO's endeavours to minimise these impacts.

Submissions to the review can be made until 17 May 2017.

GST on low value goods - Senate Committee public hearing

The Senate Economics Legislation Committee held a public hearing on 21 April 2017 to discuss the Treasury Laws Amendment (GST Low Value Goods) Bill 2017. The Labor Party has called on the government to delay the implementation of these proposed rules until 1 July 2018, engage with all stakeholders and review alternative models, and deliver a Regulation Impact Statement to assure small businesses and consumers that the measure will operate as intended. Labor supports the removal of GST on low-value imports with a feasible model.

ATO GST administration annual performance report for 2015–16

The ATO has released the GST administration annual performance report for 2015–16. Highlights include:

·       The ATO collected AUD$57.4 billion in net GST cash (excluding non-general interest charge penalties), 5.4 per cent higher than last year. AUD$3.3 billion in GST liabilities was raised through compliance activities, with further AUD$54.3 million raised by compliance activities of the Department of Immigration and Border Protection.

·       The value of GST liabilities paid on time increased (up 1.7 per cent) and collectable GST debt decreased (down 2.6 per cent). The estimated GST gap (including debt) for 2014-15 is AUD$3.78 billion.

·       The release of advice on the sharing economy and on providing taxi travel services through ride-sourcing, the ATO’s focus on the gold bullion and precious metals refining industry, and the ATO’s contribution to the development of the OECD guidelines on low value and imported services were mentioned

Reverse charge in the precious metals industry

The Minister for Revenue and Financial Services has announced that the Government is taking action to combat fraud in the gold trading industry. From 1 April 2017, entities buying gold, silver and platinum that have been supplied as a taxable supply for GST purposes will be required to apply a reverse charge.

GST distribution between States and Territories

The Commonwealth Grants Commission has updated its report on GST Revenue Sharing Relativities. This report contains the Commission’s response to the Terms of Reference for the 2017 Update, which asked the Commission to advise how GST revenue should be distributed among the States and Territories in 2017-18.

Call option fee and acquisition cost of real property for margin scheme

In the Trustee for the Whitby Trust v Commissioner of Taxation [2017] AATA 343, the Administrative Appeals Tribunal (AAT) has affirmed the Commissioner's decision and held the applicant could not include a call option fee in the acquisition cost of real property (acquired following the exercise of the option) for margin scheme purposes in accordance with Division 75 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The Tribunal was of the view that GSTD 2014/2, although not binding on the Tribunal, was well-founded both in terms of the GST Act and the common law on options.

AAT affirms Commissioner’s decision to impose penalties for failing to lodge BAS statements and report taxable supplies

The AAT in The Norwestern Trust v Commissioner of Taxation [2017] AATA 361 has affirmed the decision of the Commissioner to impose administrative penalties imposed on the applicant for failing to lodge Business Activity Statements (BAS) and report sales of properties as taxable supplies. The Tribunal also affirmed the specific finding of fraud and evasion made by the Commissioner based on relevant evidence and did not exercise its discretion to remit the administrative penalties.

Select Committee on Red Tape - interim report regarding sale, supply and taxation of alcohol

The Senate Select Committee on Red Tape has tabled its interim report on the effect of red tape on the sale, supply and taxation of alcohol. The Committee made several recommendations, including that the Government provide leadership on the issue of alcohol taxation by establishing clear policy objectives for and to progress reform of alcohol taxation (such as a single volumetric tax rate and changes to time of settlement of tax liabilities).

Wine equalisation tax rebate – release of exposure draft legislation

The Government has released exposure draft legislation that proposes to give effect to the previously announced reforms to the wine equalisation tax (WET) rebate. The proposals include the following key measures:

·       From 1 July 2018, eligible producers will be required to own at least 85 per cent of the grapes used to make the wine throughout the winemaking process.

·       The rebate will be limited to wine branded with a registered trademark, and packaged in a container not exceeding five litres for domestic retail sale.

·       Wine producers will need to better link their rebate claims to the wine tax being paid.

·       The WET rebate cap will be reduced from AUD $500,000 to AUD $350,000 from 1 July 2018.

Submissions were due to be made by 28 April 2017. Refer to the joint media release by the Minister for Revenue and Financial Services and the Assistant Minister for Agriculture and Water Resources for further information.

GST legislative determinations issued

A number of GST legislative instruments were issued in recent weeks. This includes a number of determinations that relate to certain industries or businesses to:

·       allow the issue of recipient created tax invoices (RCTIs)

·       waive the requirement for a tax invoice or an adjustment note to attribute a decreasing adjustment to a tax period

·       specify the particular attribution rule for GST payable on a taxable supply or creditable acquisition for various transactions, and including Goods and Services Tax: Application of Particular Attribution Rules Determinations (Determination) 2017 which applies when two or more determinations specify different attribution rules for the same kind of taxable supply or creditable acquisition.

In addition, the following legislative instruments were made:

·       GST-free Supply (Child Care) Determination 2017

·       GST-free Supply (Long Day Care and In-home Care) Determination 2017

·       GST-free Supply (Health Services) Determination 2017

·       GST-free Supply (Care) Determination 2017

·       Goods and Services Tax: Accounting on a cash basis Determination 2017 — Industrial Trade Unions

·       A New Tax System (Goods and Services Tax) (Language Other Than English – LOTE – courses offered by ethnic schools) Determination 2017