Proposed time limits to be set for input tax or fuel credit claims

 

The ATO recently released a draft ruling (MT 2018/D1) that would mean claims for input tax or fuel tax credits would have a time limit imposed on them.

The draft ruling sets out the Commissioner’s view on time limits applying to the entitlement to claim an input tax or fuel tax credit set out in:

  • subsection 93-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), and
  • subsection 47-5(1) of the Fuel Tax Act 2006 (FTA).

The draft ruling clarifies that the time limit to claim these credits is four years from the due date of the first BAS in which the credit could have been claimed.

It also clarifies that this time limit cannot be extended by requesting an amendment, lodging an objection or applying for a private ruling. This is the case even if:

  • the objection, amendment request or private ruling application is made within the four year entitlement period
  • the period of review for the assessment of the relevant tax period has not expired, and
  • you provide all necessary information, including the amount of tax credits you would like to claim.

The draft ruling contains examples of how the time limit applies in different circumstances. For example:

Violet purchases a mobile phone in November 2013 that she uses in her enterprise. She is required to lodge quarterly, and the due date for her GST return for the December 2013 quarterly tax period is 28 February 2014.

She lodges her GST return late, on 7 March 2014, and her net amount is assessed. In an oversight, Violet does not claim any input tax credits for the mobile phone.

The four year entitlement period ends on 28 February 2018. The period of review ends on 8 March 2018.

Violet later discovers that she could have claimed input tax credits for the mobile phone. On 26 February 2018 Violet lodges an objection seeking input tax credits in respect of her mobile phone acquisition. The Commissioner does not make a decision on Violet’s objection until 10 March 2018, after the four year entitlement period has expired.

Violet’s entitlement to input tax credits has ceased, as the credits were not included in an assessment within the four year entitlement period. The Commissioner advises Violet that she is not entitled to the input tax credits and disallows her objection. Her assessment cannot be amended to include the input tax credits.

The draft ruling contains seven separate examples to explain the proposal, each describing different scenarios that clients may experience. (Click to read the ruling, and scroll down.)

It does not change the ability to claim GST or fuel tax credits in a current BAS or by amending a previous BAS, as long as they are included in an assessment within the four year time limit.

The date of effect may be viewed as a little contentious, as the ruling states that “when the ruling is issued, it will apply before and after the date of issue”. However the ATO says that it will not apply “to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue”.

Proposed time limits to be set for input tax or fuel credit claims Proposed time limits to be set for input tax or fuel credit claims Proposed time limits to be set for input tax or fuel credit claims Proposed time limits to be set for input tax or fuel credit claims Proposed time limits to be set for input tax or fuel credit claims Proposed time limits to be set for input tax or fuel credit claims Proposed time limits to be set for input tax or fuel credit claims Proposed time limits to be set for input tax or fuel credit claims