Potential GST refund and four year time limit
On 1 September 2011, the full Federal Court handed down its decision in Qantas Airways Limited V Commissioner of Taxation, in favour of Qantas.
The whole disputation centred on whether Qantas was eligible to claim GST refunds in relation to the pre-paid fares received from passengers who cancelled their reservation or failed to take the flight and no refund was available or claimed.
The full Federal Court confirmed there is no taxable supply for GST purposes when the relevant supply does not occur; the essence, purpose, substance and reality of the transaction must be identified rather than artificially dissecting the arrangement.
This decision has implications for taxpayers in a variety of industries who receive payments for services.
It is important to note that there is a four year limit on claiming GST refunds due to section 105.55 from schedule 1 of the Taxation Administration Act 1953 (Cwlth).
Under this section you are not entitled to a refund unless you notify the commissioner within four years after the end of the relevant year.
This can be done either by lodging a revised activity statement or by lodging a ‘Notification of Entitlement’ to the GST refund.
It is worth talking to Surry Partners to identify your potential GST credit status in light of the Federal Court decision.