Statutory demand for GST debt set aside
The NSW Supreme Court has set aside a statutory demand served on the plaintiff in which the defendant claimed an amount of $117,974.03. The description of the debt and the demand was stated to be an amount of GST paid in mistake to the plaintiff that should have been remitted to the Tax Office.
The plaintiff was the owner of land that was subject to a mortgage to the defendant. On 2 March 2010, the defendant as mortgagee exercising its power of sale, sold the land at auction for an amount of $1,175,000 exclusive of GST. Out of the settlement funds, the defendant received $905,674.16 in repayment of the amount due on the mortgage. On 21 April 2010, the plaintiff was paid the balance of $322,162.12. However, the amount the defendant received on settlement included an amount of GST which the defendant had collected from the purchaser of the property totalling $117,974.03. The defendant's claim arose because it said that at the time it had paid the $322,162.12 to the plaintiff, there was outstanding GST in relation to the sale that had not been remitted to the ATO.
The Court found that the statutory demand was deficient but it proceeded to address whether the amount claimed in the demand was a debt.
The Court noted that s 33-5 of the GST Act sets out when payments of net amounts must be made to the Commissioner. In applying that section to the defendant, the Court said that if the defendant had a quarterly tax period, the due date for payment would have been 28 July 2010, whereas if the defendant had a monthly tax period, the due date would have been 21 May 2010.
As the demand was dated 22 June 2010, the Court was of the view that the defendant would only accrue a liability if it had a monthly tax period. However, the Court observed there was no evidence on this subject, and therefore it was unable to determine whether there was a liability for GST as at the date of demand.