The ins and outs of GST can be confusing when you’re trying to run a small business. Don’t miss out on those crucial GST refunds because you’ve missed the deadline.
Did you know? You have 4 years to claim GST refunds
Small businesses that are entitled to refunds of GST might not realise there is a four year time limit on claiming them. This means that any entitlement to a GST credit expires four years from the due date of the earliest activity statement it could have been claimed.
GST refunds can be claimed under the indirect tax concession scheme (ITCS), which includes things like the luxury car tax (LCT), wine equalisation tax (WET) and excise. These outstanding indirect tax funds are entitled to the taxpayer but yet to be claimed.
What type of GST refunds can I claim?
Any “outstanding indirect tax funds” can be claimed in a number of ways:
Refund of a net amount for a tax period
If you run a small business and your GST entitlements total $2500 (exceeding the net GST, WET and LCT liabilities for that period of $2000), you can claim an outstanding indirect tax refund of $500 if you’ve not yet lodged an activity statement for that period.
Refund of an overpayment of a net amount
Have you made an accidental overpayment of GST? Don’t be concerned! If due to an administrative error you report and pay $4,500 net GST for a tax period instead of $4,050, you can claim the excess amount of $450 as an indirect tax refund.
Refund due to underreported initial net refund entitlement
Your small business claimed a net GST refund of $3,000 for a certain tax period, and received it. But, if you then realise that your actual refund entitlement was $3,200 (every cent counts!), you can claim the extra $200 as an outstanding indirect tax refund.
Refund of indirect tax relating to an importation
Overpayments of GST for importations are also grounds to claim a refund. If your small business imports goods and overpaid $200 GST, this also represents an outstanding tax refund that can be claimed within the four year period.
Four years to claim your cash… don’t miss out
Four years might sound like a long time, but time flies when you’re running a business. Generally, if you have a refund resulting from a GST error, you can revise the activity statement, request an amendment in writing or correct the error in a later one.
Make sure you claim within the four year period of review, or your refunds will disappear into the abyss of the Australian taxation system.