Son of Holdback – the final push

Many Dealers will recall the very pleasant feelings generated when the ATO refunds for holdback and Son of Holdback hit their bank accounts. It is, however, worth noting that while the vast majority of issues surrounding those GST refund entitlements have long since been settled, a few categories of incentives have remained in the too hard basket and are yet to be resolved.

As ever, Deloitte has led the charge to try and ensure the best possible result for Dealers that have preserved claim rights for these incentives. Deloitte has been working closely with Senior Tax Counsel and has shared Senior Counsel’s views with the ATO. The ATO is currently considering its response to the legal opinion, provided by Deloitte, that covers a range of incentives yet to be resolved, including some (but not necessarily all) demonstrator/service loan car incentives, advertising/marketing incentives and parts incentives.

At this point we are not in a position to predict the eventual outcome. However we do note that in the past, when dealing with these type of motor Dealer GST refunds, the ATO has approached the resolution process with an open mind and has understood the practical difficulties facing Dealers to substantiate claims for such historic periods. Deloitte remains hopeful the ATO will want to conclude these outstanding matters in the same positive spirit, particularly given the GST refunds are only in respect of the past which, in some cases, date back to the commencement of GST and the July 2000 tax period.

Interest for GST refunds

Deloitte is also at the forefront of another issue that could be beneficial for many Dealers, as well as for taxpayers, across a broader range of industries. They have challenged the way the ATO applies the interest provisions of the legislation to refunds of overpaid GST. In a nutshell, Deloitte believes the taxpayer should be paid interest, recognising the time value of money, from the date of lodgement of the original BAS to which a refund relates. The ATO, on the other hand, believes interest is only paid from a later date after the refund has been notified to them. Just to be clear, the challenge relates to interest payable by the ATO to taxpayers in circumstances where GST has been over-paid. While not all GST refunds will fall within the scope of this action, if successful a decision could give rise to additional interest payments for some Dealers in respect of at least some refunds.

So, again, no certainty on the outcome, but the fact that a longstanding view of the ATO is capable of being looked at with fresh eyes by the Federal Court is very much a positive. Following a hearing on this matter in July, we hope the decision will be handed down in the near future.

We know that Dealers have to approach their operations with an innovative strategy in order to survive and Deloitte believes the same approach should be taken with tax compliance. It does Dealers no good to incur costs, including tax, needlessly.


André Spnovic
Partner, Indirect Tax,
Deloitte Tax Services Pty Ltd

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