In a recent ruling, the Australian Taxation Office (ATO) has clarified the time limits for claiming input tax credits under the Goods and Services Tax (GST) system.
This update specifically impacts businesses that fail to submit their Business Activity Statements (BAS) within the required time frame, and the ruling could have significant implications for business owners who have missed the window for claiming back GST on purchases.
The Case At Hand - No Entitlement To $10,000 In Input Tax Credits
In this particular case, a taxpayer who operated a cleaning business was denied the ability to claim approximately $10,000 in input tax credits. The reason for this denial was the 4-year time limit set out under section 93-5 of the GST Act 1999.
According to the Act, a business must lodge its BAS within the 4-year period to be eligible to claim input tax credits on its purchases. Since the taxpayer had not lodged the required BAS returns within that time frame, the Administrative Appeals Tribunal (AAT) determined that they were not entitled to the input tax credits.
The ruling also confirmed that the AAT did not have the discretion to allow the claim, regardless of the taxpayer’s circumstances or the amount involved. This decision underscores the strict compliance rules that apply to GST claims.
What Does This Mean For Your Business?
For businesses that are registered for GST, input tax credits are an essential way to offset GST paid on purchases related to business activities.
These credits can add up quickly, making it important to stay on top of filing BAS returns and ensuring that all tax obligations are met on time.
This ruling serves as a reminder that businesses need to:
- File BAS returns within the required time frame – typically by the 21st of the month following the end of each quarter.
- Be mindful of the 4-year time limit for claiming input tax credits on GST paid for purchases.
- Seek professional advice if unsure about lodging BAS returns or the eligibility for input tax credits.
How Does KPG Taxation Help?
If your business has missed the deadline to claim input tax credits or if you’re unsure about your eligibility, KPG Taxation can help guide you through the process. Our team of tax accountants can provide advice on GST compliance, ensure your BAS returns are up to date, and help you avoid costly mistakes.
Don’t miss out on your entitlements. Contact KPG Taxation today for expert assistance with your GST compliance and BAS lodging.
