In Travelex Limited v Commissioner of Taxation  FCA 1051, the Federal Court ruled that in determining the entitlement to delayed refund interest for GST overpayments in favour of the taxpayer, the relevant date in calculating the interest owing is when the taxpayer’s entitlement to the refund arose. Importantly for the taxpayer, this was an earlier date than when the taxpayer gave the Commissioner notice of the overpayment.
Given the decision was contrary to ATO practice with respect to GST returns lodged prior to 1 July 2012, the decision can still be appealed by the ATO given the wider implications for other taxpayers.
The key issue considered by the Federal Court was the period for which interest was payable. The court considered whether Travelex was required to give the Commissioner notice in relation to the refund as a precondition to an entitlement to interest commencing.
Following the introduction of self-assessment for GST effective from 1 July 2012, the appropriate period for interest commencing on GST overpayments would ordinarily be when the request for an amended assessment is lodged with the Commissioner.
However, for tax periods prior to this date, the court determined that there was no provision in the tax legislation which required Travelex to give the Commissioner notification of the refund amount for the purposes of the delayed refund interest provisions.