New GST refund restrictions — impact on procurement contracts

By Matthew Cridland

The GST Act has been amended to introduce new restrictions on Australian Taxation Office (ATO) refunds for goods and services tax (GST) overpayments. The amendments will primarily affect suppliers that inadvertently overpay GST and pass on the cost to recipients. However, the amendments also raise practical considerations for recipients, which may be best addressed through changes to GST clauses used in procurement contracts. This is particularly relevant for businesses that are not entitled to full input tax credits (GST credits) for their acquisitions.

In this Tax Update, we have summarised the new refund restrictions and the potential implications for procurement contracts. We have also included two illustrative examples at the end.

The A New Tax System (Goods and Services Tax) Act 1999 was amended on 30 May 2014. The provisions are effective from 1 June 2014 for monthly GST taxpayers and from 1 July 2014 for quarterly GST taxpayers…

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