Taxpayer’s claim for input tax credits unsuccessful
In a recent decision, the Administrative Review Tribunal rejected a taxpayer’s claim for input tax credits on the basis that all the relevant GST returns (ie BASs) were lodged out of time.
For the GST periods from 1 October 2015 to 31 March 2017, the taxpayer filed each of her GST returns more than four years after they were due. The taxpayer still claimed input tax credits totalling over $10,000 for this period.
The ATO disallowed this claim, on the basis that none of the input tax credits were claimed within the four year period, as required by the GST Act.
The ART upheld the ATO’s decision, noting that, as the taxpayer did not file the GST returns within the four year period “she did not have input tax credits taken into account . . . As a consequence, . . . (she) simply ceased to be entitled to those input tax credits.”
ATO’s appeal against decision that UPEs are not “loans” fails
The Full Federal Court recently dismissed the ATO’s appeal against an AAT decision that unpaid present entitlements (‘UPEs’) owing by a trust to a corporate beneficiary were not “loans” for Division 7A purposes.
A corporate beneficiary had become entitled to a share of the income of a trust for the 2013 to 2017 income years. Parts of these entitlements remained outstanding, resulting in UPEs. The ATO treated these UPEs as loans from the corporate beneficiary back to the trust (and, in consequence, as “deemed dividends” made to the trust).
The AAT held at first instance that a loan had not been made in this case.
The Full Federal Court upheld the AAT’s decision, noting that a loan for Division 7A purposes requires an obligation to repay an amount, not merely the creation of an obligation to pay an amount (such as when a trust distributes income to a beneficiary).
