The Federal Court of Australia held on March 19 that a research & development (R&D) tax offset refund claimed by, and paid to, a taxpayer, but to which the taxpayer was not entitled, is subject to Australia’s administrative overpayment provision. As such, the Commissioner could recover the overpayment.
In Commissioner of Taxation v Auctus Resources Pty Ltd [2021] FCAFC 39, the taxpayer had self-assessed an AUS 2.3 million (USD 1.8 million) R&D tax offset refund on its 2013 return. The Commissioner paid the refund and then subsequently sought to recover the payment. There was no dispute before the court that the taxpayer was not entitled to the refund payment.
The administrative overpayment provision, contained in 8AAZN of the Taxation Administration Act 1953 (Cth) (TAA), enables the Commissioner to recover overpayments that it has made by mistake to a taxpayer not entitled to the payment.
The dispute centered on whether the tax offset refund paid automatically under the self-assessment regime was “paid … by mistake” within the meaning of the administrative overpayment provision and whether the payment met the definition of an administrative overpayment.
Siding with the Commissioner, and disagreeing with the primary judge, the court concluded that the payment was paid “by mistake,” because the taxpayer was not entitled to the payment.
It was not necessary for the Commissioner to have actively made a mistake in deciding to issue the payment. Moreover, the court determined that the administrative overpayment provision should not be construed so narrowly so as to not cover the tax offset refund provision at issue in the case.
Be the first to comment