Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)Correcting errors in working out amounts under indirect tax laws
Outline of chapter
2.1 Schedule 2 to this Bill amends the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and the Fuel Tax Act 2006 (Fuel Tax Act) to allow the Commissioner of Taxation (Commissioner) to make a determination allowing a taxpayer to take into account, on his or her goods and services tax (GST) or fuel tax return for the current tax period or fuel tax return period, minor errors made in working out net amounts and net fuel amounts for preceding tax periods or fuel tax return periods.
Context of amendments
2.2 Under the existing law, special concessions exist to allow for the correction of certain errors in GST returns and fuel tax returns without requiring the amendment of past returns.
2.3 Section 17-20 of the GST Act currently allows the Commissioner to determine specified circumstances in which a taxpayer may correct an error made in working out his or her net amount in the immediately preceding tax period, in working out his or her net amount in the current tax period.
2.4 The Fuel Tax Act does not currently contain an equivalent discretion.
2.5 However, the Commissioner has exercised his power of general administration to permit, in certain specified circumstances, minor errors made in preceding tax periods or fuel tax return periods to be corrected, without penalty, in the GST or fuel tax return for the current tax period and fuel tax return periods.
Summary of new law
2.6 Schedule 2 allows the Commissioner to determine the circumstances in which taxpayers may, in a particular tax period or fuel tax return period, account for errors arising from mistakes relating to net amounts and net fuel amounts in prior tax periods or fuel tax return periods, provided the period of review relevant to the error has not expired. The amendments do not limit such determinations to relate to immediately preceding tax periods or fuel tax return periods.
| New law | Current law |
| The Commissioner has the discretion to determine the circumstances in which a taxpayer may account for errors in relation to net amounts or net fuel amounts for prior tax periods and fuel tax return periods, as long as the error is corrected during the relevant period of review. | The Commissioner has the discretion to determine the circumstances in which taxpayers in specified circumstances may account for errors in the immediately preceding tax period in working out the net amount for the current tax period. |
Detailed explanation of new law
2.7 Schedule 2 provides the Commissioner with a specific power to allow taxpayers (at his or her discretion), in a particular tax period or fuel tax return period, to account for errors arising from errors relating to net amounts and net fuel amounts in prior tax periods or fuel tax return periods, provided the period of review relevant to the error has not expired.
2.8 These amendments allow the Commissioner to determine, in writing, the circumstances in which a taxpayer may calculate his or her net amount for a tax period to take account of errors arising from mistakes relating to net amounts for prior tax periods, provided that the period of review relevant to the assessment containing the error has not expired. [Schedule 2, item 1, subsection 17-20(2A) of the GST Act]
2.9 An equivalent provision is inserted into the Fuel Tax Act in respect of errors made in working out net fuel amounts in fuel tax returns for preceding tax periods or fuel tax return periods within time limits for the tax period or fuel tax return period under sections 105-50 and 105-55 or the period of review (whichever is applicable). [Schedule 2, item 3, section 60-10 of the Fuel Tax Act]
2.10 For tax periods commencing before 1 July 2012, errors may not be corrected if the time limits under sections 105-50 and 105-55 of the Taxation Administration Act 1953 (TAA 1953) have ended. [Schedule 2, item 1, subsection 17-20(2) of the GST Act ; item 3, subsections 60-10(2) and (3) of the Fuel Tax Act]
2.11 The amendment means that, if the Commissioner allows, taxpayers may correct errors arising from a previous GST or fuel tax return on their current return instead of amending the previous assessment. The taxpayer will also not be liable for the general interest charge.
Application and transitional provisions
2.12 These amendments apply to tax periods and fuel tax return periods commencing on or after 1 July 2012.
Consequential amendments
2.13 A reference to the definition of 'period of review' in the TAA 1953 is inserted into the GST Act and the Fuel Tax Act. [Schedule 2, item 2, definition of 'period of review' in section 195-1 of the GST Act ; item 4, definition of 'period of review' in section 110-5 of the Fuel Tax Act]
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Schedule 2 - Correcting errors in working out amounts under indirect tax laws
2.14 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .
Overview
2.15 This Schedule amends the GST Act and the Fuel Tax Act to allow the Commissioner to make a determination allowing a taxpayer to take into account, on his or her GST or fuel tax return for the current tax period or fuel tax return period, minor errors made in working out net amounts and net fuel amounts for preceding tax periods or fuel tax return periods.
Human rights implications
2.16 This Schedule does not engage any of the applicable rights or freedoms.
Conclusion
2.17 This Schedule is compatible with human rights as it does not raise any human rights issues.
Assistant Treasurer, Senator the Hon Mark Arbib