Newsletter
October 2010 Newsletter
Court Can't Review Tax Office Decision to Delay GST Refunds Payable
The Federal Court has dismissed a taxpayer’s application for a review under the Administrative Decisions (Judicial Review) Act 1977 (AD(JR) Act) of a Deputy Commissioner’s decision to ‘withhold’ GST refunds that were payable under the GST Act.
The taxpayer’s BAS for the tax period 1 May to 31 May 2009 showed a refund of $9,837. In June 2009, the Tax Office contacted the taxpayer requesting documents in order to verify the information contained in the BAS.
Notwithstanding the taxpayer furnished the requested documents, the Tax Office decided to conduct a desk audit in respect of some aspects of the affairs of the taxpayer and its related entities. In early November 2009, the taxpayer received notification the audit was completed. However, in late November 2009, the taxpayer had not received the refund and contacted the Tax Office to enquire about the status of it. This resulted in a series of correspondences between the taxpayer and the Tax Office. In February 2010, the Commissioner sent a letter to the taxpayer stating that he was considering a more comprehensive audit of the taxpayer in relation to the refund and that subsequent refunds lodged by the taxpayer were held up. The taxpayer then commenced proceedings for a review of the Deputy Commissioner’s decision to ‘withhold’ the refunds.
The Commissioner objected to the competency of the proceedings on the basis that the taxpayer’s application did not identify any decision that is justiciable under the AD(JR) Act.
The Court noted the AD(JR) Act applies to a decision of an administrative character made under an enactment. It also noted the taxpayer was unable to point to any enactment under the purported decision that was made, other than s 3A of the Taxation Administration Act 1953 (TAA). In the Court’s view, the Commissioner is empowered under that section to decide not to make a payment in circumstances where the Commissioner is concerned there may be other moneys owing by the taxpayer to the Tax Office. It said the Commissioner’s decision to exercise that right would not be a decision under the enactment within the AD(JR) Act but rather an exercise of a discretion in the administration of the TAA. Accordingly, the Court considered that the taxpayer had no reasonable prospect of obtaining the relief sought.
TIP: This case demonstrates that in such situations a taxpayer is unable to ‘force’ the Tax Office to release a refund. If a taxpayer is the subject of a Tax Office audit, a GST refund may be withheld. Also, the Commissioner can apply the refund against any outstanding liabilities.
PFTF Stock Pty Ltd v DCT [2010] FCA 557, Federal Court, Emmett J, 28 May 2010