How to receive your GST refund Quick - IRD's liability to pay GST refunds

[fpl]

This might be helpful. One of my clients received his refund 2 hours after I suggested he points the following out to IRD. Prior to that IRD would not pay out without completing their investigation.

The imposition of GST on real estate transactions, particularly those of a significant size, is a matter that raises a number of complex issues for both clients and their lawyers.
Where possible, many clients try to side-step these issues, either by zero rating the transaction (where the property is subject to a non-residential tenancy or is part of a business) or applying for a GST offset.

Where these avenues are not available or chosen, the imposition of GST has to be considered carefully. For the purchaser, the timely receipt of a GST refund following a significant property acquisition is often an important component of financing the transaction.

"Section 46 of the GST Act is very clear that when the IRD receives a return claiming a refund, the refund must be paid within 15 working days. The only exception is where the IRD gives notice of an investigation or requests further information before the expiry of that 15 working day period. If no such notice or request is made within the period, the refund cannot be delayed, regardless of whether or not the IRD wishes to investigate the claim. This is confirmed by the Court of Appeal decision in eIR v Sea Hunter Fishing Ltd (2002) 20 NZTC 17,478.

Recent experience with the IRD's Takapuna office suggests that some IRD officers are not fully conversant with s46, or are not prepared to act in accordance with it. The effect is that refunds are delayed pending the completion of investigations, potentially giving rise to seriously adverse commercial consequences for taxpayers. Given the relatively short time frames involved, taxpayers may have no practical way to force the IRD to provide a refund, other than requesting the intervention of the IRD national office. However, it may be that such a clear breach of a statutory duty would found a claim for damages for any consequential loss.

This is obviously a practice that the IRD's national office should eliminate. Some form of statement in a Tax Information Bulletin would be helpful. In the meantime, lawyers should warn their clients that currently there is no certainty that the IRD will provide a GST refund within the timeframes guaranteed by the law.
Source:*Casey Plunket is a co-convener of the NZLS Taxation Committee and a partner with Chapman Tripp, Auckland.

PS Would your bank tell you this?

[cube]

Hi Daniel,

I guess you meant GST refund in the title?

The article (I think you quoted it from somewhere else?) doesn't clarify if the IRD in Takapuna are carrying out "investigation" without notifying the claimant that that is the case, or that they are taking more than 15 days to do so - is this your understanding?

Thanks

cube

[fpl]

Timeframes guaranteed by the law

Hi Cube,
From what I’ve seen in hundreds of transactions it’s not only the Takapuna but offices throughout NZ not paying GST refunds in a timely manner. That is 15 working days.
My understanding and certainly the outcome for my client is that IRD has to pay out within 15 working days according to Section 46 of the GST Act. The only exception is where the IRD gives notice of an investigation or requests further information before the expiry of that 15 working day period. However, the investigation must relate to the entity making the claim and the particular period.
When IRD intends to or does investigate a GST return they ask for documents supporting the claim and / or issue a notice of an investigation and ask for supporting documents.
IRD’s standard answer when they’re late seems to be “we’re not a bank”. While this is true they still have to pay out according to the timeframes guaranteed by the law.
We have systems in place to speed this up. One of them as mentioned here is to help IRD to make the right decision.
The source is acknowledged at the end of the text.

[Perry]

IRD’s standard answer when they’re late seems to be “we’re not a bank”.

Perhaps the "standard" answer to that could be:

True. However, are you above the law, particularly:
section 46 of the GST Act? If so, how?

[drelly]

Send in a copy of your S&P agreement with the GST claim. It saves them asking.

[cantthinkofanickname]

Not necessary, i attached copy's of s&p and purchase statement to my last gst return a week later was asked to supply them again so my question is what did you do with the first set. my accountant said they probably opened the gst letter and threw every thing else out .

[gcoo029]

Incompetent idiots - AKA IRD

Not necessary, i attached copy's of s&p and purchase statement to my last gst return a week later was asked to supply them again so my question is what did you do with the first set. my accountant said they probably opened the gst letter and threw every thing else out .

I seem to have struck the same incompetent idiots at the Takapuna branch. I sent all of the information required (S&P agreement, settlement statement etc) with the original return.

I got a phone call requesting more info on the 14th working day (including the stuff I had already sent) and info on what I do (Lease options which I supplied) and the investigator seemed satisfied. I have just had a call today saying that his superior was not happy with his conclusion. Because the TB's only sign an option agreement they are saying that they could potentially pull out of the deal and the property would then become a normal rental. I have explained that in that case they would lose their (considerable) IOC and any rent credits and that i would then have the property revalued and sell to a new tenant buyer.

Has any one who is doing lease options (and claiming GST on the purchase price) struck this problem???? If you have been investigated I would be keen to know the name of the investigator who signed off on your business model?

They went as far as requiring print outs of all the information on my website.

[cube]

I haven't had that, or the other scenario where a GST refund is paid on purchase, but then subject to a 'deemed sale' further down the track, requiring the refund to be repaid, but I thought I'd mention it anyway!

cube