Division 93 of the GST Act imposes a very strict four year time limit in which to claim your input tax credits (ITC). If you haven’t claimed those ITCs within that ’Entitlement Period‘, you may lose your entitlement with no further recourse. Similar rules apply for Fuel Tax Credit (FTC) claims.
Contents
The Australian Taxation Office (ATO) has issued MiscellaneousTaxationRulingMT 2024/1 (Ruling), outlining its views on how that four year Entitlement Period operates and, importantly, when it will accept that a claim has been made within time. Some of those views are restrictive, so it is crucial that you understand the limitations and requirements so that you don’t inadvertently miss out on the ITCs and FTCs to which you may be entitled.
Key Issues
The ATO emphasises that there is no leeway in the Entitlement Period – once it expires, the entitlement to ITC/FTC ceases and cannot be revived. It is therefore crucial that the claim is properly made in the Entitlement Period.
The Entitlement Period commences from the due date of the GST return, not the lodgement date/date of assessment. This is important where returns have been lodged late and sets up a different four year period to that in which objections/requests for amended assessments can be made (see below).
The Entitlement Period applies (from the original BAS due date) for ITCs even when tax invoices are not held at the time of the original BAS and the ITC entitlement ’rolls over‘ to future tax periods.
While the Ruling doesn’t discuss GST liabilities on supplies, it is important to note that there is no corresponding expiry on your liability. Cases have confirmed that where a GST return is not lodged by the due date, ITC entitlements on purchases cease once the Entitlement Period expires, but you remain liable for the GST payable on sales.
This is key – if the credit claim is not expressly included in as a line item or ‘integer’ in your BAS workings leading to an assessment (e.g. on lodgement), then it has not been ‘taken into account’ and the four year Entitlement Period continues to run.
The ATO’s approach as set out in some examples is quite restrictive, so if you have some material ITC entitlements that are being carried-over for later consideration, you should examine whether the ATO would accept they remain (and when they might expire) or whether the Entitlement Period has expired.
For instance, the ATO considers that the non-claimed portion of an ITC has not been ‘taken into account’. Similarly, a positive decision to exclude an amount because an ITC is not available (e.g. due to lack of creditable purpose) means that it has not been taken into account and the Entitlement Period continues to run.
This has particular relevance to partial recovery or full denial of ITCs for input tax businesses and partial recovery of FTCs for eligible usage.
The ATO correctly points out that while in practice the four year Entitlement Period and the four year ‘Period of Review’ for assessments and objections overlap and run concurrently, they are different rules applied in different circumstances. It is important that the start and end dates of these periods are identified accurately to make sure that you are working to the correct deadline.
Similarly, depending on the timing, circumstance and content of objections, BAS corrections, and requests for amended assessments, they may not constitute a claim within the Entitlement Period and the entitlement could be lost due to effluxion of time.
Conclusion
The Ruling underscores just how technical some aspects of the ATO’s rules can be and the importance of attention to detail in dealing with these rules. We can guide your through these issues to ensure that you do not miss out on your entitlements.
Learn more about how our Tax services can help you
In this episode, Principal and National Head of Private Business & Tax Advisory Technical Tax, David Montani, Specialist Tax Partner and National Head of Real Estate & Construction Anika Reside and Corporate Tax Partner Mark D’Angelica discuss the outcomes of the Economic Reform Roundtable, why tax reform has historically been challenging in Australia, and their ideal tax mix for a more productive and prosperous nation.
The ATO’s GSTD 2025/1 clarifies the GST treatment of prepared meals following the Simplot case. Learn how the new four-step test and transitional compliance approach affect food suppliers.
A practical guide for residential colleges reviewing GST treatment for the 2026 academic year – covering endorsed charity concessions, PCG 2022/3, Division 129 adjustments, and strategies to manage GST liability and compliance with confidence.
Subscribe now to be kept up-to-date with timely and relevant insights, unique to the nature of your business, your areas of interest and the industry in which you operate.
