Anti-Avoidance Provisions for the GST
Division 165 of the GST legislation contains a general anti-avoidance provisions. Section 165 states of the object of the division is to deter schemes to give entities benefits by reducing GST, increasing refunds or altering the timing of payments the GST or refunds. When he anti-avoidance provisions apply, the Commissioner may negate the benefit and it gets from the scheme by declaring how much GST or refund would have been payable, and when it would have been payable, apart from the scheme. A section specifically states that the division is aimed artificial or contrived schemes, however the operative provisions in the division do not appear to pick up that limitation. It is anticipated that the provisions could apply in a broad range of circumstances beyond what would ordinarily be described as artificial contrived, or as part of a deliberate scheme to a GST. The operative anti-avoidance provision is set out in the section and under at it operates only if a specific set of conditions are met.
The conditions include an entity receives or has received the GST benefit from the scheme, the GST benefit is not attributable to the making of choice, election, application or agreement that is expressly provided for by the GST law, the one tax equalisation law or the luxury car tax law. Other factors include taking into account all the matters described in the section, it is reasonable to conclude that either an entity entered into or carried out the scheme with a whole or soul or dominant purpose of that entity or another entity getting a GST benefit from the scheme or the principal effect of the scheme is that the entity in question gets the GST benefit from the scheme directly or indirectly and the scheme has been or is entered into or nor after to December 1998, or has been or is carried out will commence on or after that day other than a scheme that was entered into before that date.
The section provides that the anti-avoidance rules can apply regardless of the scheme was entered into or carried out inside or outside Australia. The anti-avoidance provisions are rolled around the concept of the GST benefit and the scheme. Importantly, the GST benefit must be orientated from a scheme. That is, there must be a causal link between entering into a carrying out of the scheme and the obtaining of a GST benefit. Section 165 sets out the circumstances under which an entity could suggest you benefit from the scheme, broadly in entity gets the benefit if an amount payable by the entity could reasonably be expected to be smaller than a would-be apart from the scheme, an amount that is payable to the entity could reasonably be expected to be larger than a would-be apart from the scheme and an amount that is payable by an entity could reasonably be expected to be payable later that we’ve been apart from the scheme or an amount payable to the entity could reasonably be expected to be payable earlier there would have been apart from the scheme. Understanding how the ATO looks at GST avoidance can be essential because it will prevent you from getting into trouble with the taxman.