In an Administrative Review Tribunal (Tribunal) decision on 7 July 2025, the Tribunal provided a timely reminder that an extension of time may allow lodging an objection to goods and services tax (GST) debts outside of a four-year period in unusual commercial circumstances.
In HV/LV Solutions P/L and Commissioner of Taxation [2025] ATRA 976 (7 July 2025), the taxpayer successfully obtained a decision from the Tribunal, allowing more time to lodge an objection to particular GST debts. The objection was related to bad debts arising from a dispute in the building and construction industry in the Northern Territory (NT).
Facts
The taxpayer’s business provided consulting services involving the installation of high-voltage electrical equipment used in major construction projects.
Prior to 2018, a commercial dispute arose between the taxpayer and the principal contractor on the relevant construction contract.
To resolve the dispute, the parties went through an adjudication process, whereby a NT adjudicator awarded the taxpayer an amount of $690k payable by the principal contractor. However, sometime after the determination of the award by the arbitrator, the principal contractor went bankrupt and did not pay the taxpayer any amount of money.
In 2018, the taxpayer chose to write off certain bad debts that had been previously reported as sales and GST debt on various Business Activity Statements (BAS) submitted to the Australian Taxation Office (ATO). The bad debts related to sales previously reported in the period 2004 to 2010. Furthermore, in the period from January 2004, for GST purposes, the taxpayer lodged BASs on an accrual basis.
In November 2018, the ATO issued amended assessments to the taxpayer concerning GST debts, bad debts and other unrelated matters identified during its audit. The ATO continued auditing other aspects of the taxpayer’s activities up until February 2024.
At this time, the taxpayer lodged an objection for monthly GST debts over a six-year period before 2010. This included an extension of time application in relation to the late objection.
In October 2024, the ATO refused the taxpayer’s extension of time application. Following this refusal, the taxpayer subsequently sought review of the ATO decision in the Tribunal.
Time limits for lodging objections
There is no single rule that determines the time limit for lodging an objection to a taxpayer’s affairs – whether the ATO administrative decision relates to income tax, GST or otherwise.
In the present case, the taxpayer was required to lodge an objection to a GST debt or assessment within four years of receiving a Notice of Assessment from the ATO, in accordance with section 14ZW of Schedule 1 of Taxation Administration Act 1953 (Cth) (TAA 1953).
In the case before the Tribunal, the Tribunal considered these circumstances:
- The reasons for the delay that occurred prior to the taxpayer lodging the late objection.
- The taxpayer’s actions since ATO audit finalisation.
- The strengths and weaknesses of the taxpayer’s case.
- Potential prejudice from granting or denying the extension of time to lodge the objection.
Conclusion
The Tribunal granted the taxpayer’s extension of time to lodge their objection, even though it was 16 months late.
The Tribunal based the decision on two key reasons:
- the taxpayer should be allowed to correct GST treatment of bad debts from its business, and
- the taxpayer actively engaged with the ATO on the broader tax dispute.
At the date of this publication, the ATO has not announced whether it will appeal the Tribunal’s decision to the Federal Court.
Takeaway
Generally speaking, the circumstances where the ATO may grant an extension of time to lodge a late objection to tax debts requires case-by-case consideration of all the material circumstances (refer section 14ZW of the TAA 1953 and Jonshagen v Federal Commissioner of Taxation [2016] FCA 1545).
This recent case is an important example of what is possible when a taxpayer lodges a late objection in order to seek a refund of GST.
Where a business trades in unusual circumstances, and certain events occur beyond the four year period, then a taxpayer can lodge a late objection to an assessment to seek a refund of GST.
Next steps
Please contact your Nexia advisor, if due to unusual circumstances, a late objection may be needed to seek GST refunds, including for bad debts from commercial disputes.
