House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 2 - Assessments

Overview

2.1 This Chapter explains the provisions of Division 2 of new Part VI of the Taxation Administration Act 1953 . These provisions deal with assessments of goods and services tax (GST).

2.2 Your liability to GST and your entitlements to input tax credits are based on your transactions. Payments you make or amounts you are refunded, are calculated in GST returns for the tax periods that apply to you. Payments and refunds will ordinarily be made without any formal assessment of liability by the Commissioner of Taxation (the Commissioner).

2.3 In some situations it will be necessary for the Commissioner to issue an assessment of your net amount for a tax period. For example, an assessment may be made if you fail to provide a GST return to the Commissioner by the due date, or if the Commissioner has reason to believe that amounts stated in your GST return are incorrect.

Summary of the legislation

2.4 Assessments of GST may be made by the Commissioner with or without your request. The Commissioner will be required to notify you of an assessment and you may object against it if you are dissatisfied with it. An assessment which amends an earlier assessment for a tax period replaces that earlier assessment.

Explanation of the legislation

When can the Commissioner make an assessment of GST?

2.5 The Commissioner will be able to make assessments at any time in relation to your net amount for a tax period or for the GST payable on an importation you make. [New section 22]

2.6 If you are dissatisfied with an assessment the Commissioner makes you will be able to seek review by lodging an objection as set out in Part IVC. [New subsection 62(3), item 1 of the table]

Can you require the Commissioner to make an assessment?

2.7 You can request the Commissioner to make an assessment of the net amount for a tax period or of the GST on a taxable importation. [New subsection 23(1)]

For example, you may wish to do this if you consider that the Commissioners interpretation of the law is incorrect and you wish to avail yourself of the review rights the law provides. You may also request an assessment to correct an error in a return for an earlier tax period.

2.8 Ordinarily, you must make your request within 4 years from the end of the relevant tax period or, in the case of an importation, within 4 years from the time of the importation. In special cases, the Commissioner may allow you further time to make your request. [New subsection 23(2)]

Underlying liability is not affected by assessment

2.9 The GST law will expressly state that your liability to GST and the Commissioners obligation to refund an amount for a tax period, and the due date for payment of GST and for refunds, will arise independently of the making of an assessment. [New section 24]

Notice of assessment

2.10 The Commissioner will be required to give you a notice of assessment as soon as practicable after it is made. However, a failure to give the notice to you will not invalidate the assessment. [New subsection 25(1)]

2.11 If you lodge your GST returns electronically (under section 31-25 of the GST Act) the Commissioner may provide the notice of assessment to you by electronic transmission. [New subsection 25(2)]

Amendment of assessments

2.12 The Commissioner may amend an assessment at any time. [New section 26]

However, there are time limits on collecting GST or claiming refunds (see paragraphs 3.27 and 3.28 about new sections 35 and 36 ).

A later assessment replaces an earlier assessment for a particular tax period. [New section 27]