Be Aware Of Strict Time Limits When Claiming GST Credits

Are you aware of the time limits for claiming a refund that apply in the tax law regarding GST Input Tax Credits? A recent case before the Administrative Appeals Tribunal (AAT) serves as an important reminder to all businesses, including SMEs.


The company in this case imported goods into Australia. It should have claimed $100,000 more in credits than it actually did. The error was made in calculating how much it could actually claim as input tax credits under GST law. The company was aware of this mistake in 2005; however they thought they had plenty of time to rectify the situation.

The company did not lodge a revised Activity Statement. In 2009 they tried to recover the GST by increasing their claims for input tax credits on creditable importations by over $100,000. The original importations were made in May and June 2005. While the company knew of the error, it only lodged the adjusted BAS in 2009, thereby failing to show the real figure for input tax credits for the importations in its quarterly BAS for the period ending 30 June 2005.

The relevant tax law requires a taxpayer to notify the Commissioner the amount of input tax credits within four years after the end of a tax period or importation.

The end of the relevant tax period for the company was 30 June 2005. Since more than four years had elapsed between that period and the lodgement; AAT stated that the notice was not given within the required time period. Therefore, the company was not entitled to claim additional input tax credits relating to the importations.

According to the AAT, the law requires that a tax payer lodge the revised BAS prior to the expiry of the four year time limit, or else it will lose the right to the input tax credit. Had the company given the Tax Commissioner notice within the time frame, the company would have been entitled to a credit for additional input tax credits.

The rules are such that neither the Commissioner nor the AAT itself has the discretion to extend the company’s time period within which it should give notice of its entitlement. The company was legally entitled to the credits; however it failed to claim them with the required time frame. As a result of this, it missed out on a credit of more than $100,000.

This is a lesson for all businesses that input tax credits should be claimed on time. They do have four years to claim but miss out on that and you have no further recourse.

People might suggest the Commissioner be given the discretion to amend the time frame and extend it. There is a lot of controversy surrounding the issue of discretion. We believe it may create conflict if Commissioner is given more discretion as they may play with decision making and result in uncertainty.

Taxpayers need to be in constant contact with their professional advisors so that correct decisions are made with regard to tax matters. When was the last time you spoke to us here at Lockwood and Ward?

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