An Addendum to Miscellaneous Taxation Ruling MT 2010/1 (Restrictions on GST refunds under s 105-65 of Sch 1 to the TAA) has been released to reflect the Federal Court’s decision in International All Sports & Anor v FCT (2011) 81 ATR 607.
In that case, the Federal Court held that the global GST amount of entities that carried on a bookmaking business should include monetary prizes paid to overseas gamblers, which had the effect of reducing the amount of GST payable. The Court also held that s 105-65 did not apply because it could not be said that the overpayments made by the taxpayers arose because supplies were treated as taxable supplies, or arrangements were treated as giving rise to taxable supplies, to any extent.
Before the Court, the Commissioner had argued that s 105-65 would apply whether the overpayment of GST arises from a miscalculation or a mischaracterisation. Following the Federal Court’s decision, the Commissioner now takes the view that:
- s 105-65 will apply where an overpayment of GST arises from a mischaracterisation of a supply as taxable to some extent and it is not taxable to that extent (and the other requirements of the section are satisfied);
- s 105-65 does not apply where the supply is always correctly treated as a taxable supply but only where an overpayment of GST arises from a mere miscalculation.
Accordingly, the Addendum makes extensive amendments to MT 2010/1 to update the ATO’s views in relation to situations where s 105-65 would apply to restrict refunds.
Other notable amendments include:
In accordance with International All Sports, the Commissioner will administer s 105-65 on the basis that in tax periods that commenced prior to 24 March 2010, it does not apply where gambling operators have miscalculated their global GST amount under Div 126 of the GST Act by failing to include the value of monetary prizes paid to non-resident customers.
The Addendum also amends the ‘Date of Effect’ of MT 2010/1 to state that the Addendum (issued on 19 September 2012) explains the ATO’s view of the law as it applied both before and after its date of issue. However, it adds that if a taxpayer had relied on the Ruling prior to the release of the Addendum, the taxpayer is protected in respect of what that taxpayer did up to the release of the Addendum.
The Addendum applies both before and after its date of issue.
