The Employers and Manufacturers Association (EMA) is up in arms at a ruling by the Supreme Court on the issue of the Inland Revenue Department (IRD) taking its time to determine GST refunds.
The EMA said small business could go bust if they do not receive GST refunds and the area
of law needs to be clarified.
The Supreme Court has ruled the IRD can withhold company GST refunds for an indefinite period until it is satisfied the money should be refunded.
The ruling, released yesterday, centres on whether the IRD was obliged under the Goods and Services Tax (GST) Act to refund GST of about $7.5 million to inbound tourism operator Contract Pacific.
IRD received the company's return on June 26, 2000. However, on July 10, IRD gave the company notice, within the required 15 days, that it planned to investigate the return. The department said it was not obliged to refund the money until it was completely satisfied of the amount to be refunded and that Contract Pacific had met all its tax obligations.
In January 2001, Contract Pacific argued that a further request for information from the department was unauthorised under the Act and the money should be refunded. However, the Supreme Court rejected that argument and said the department was within its rights to request the information and hold on to the refund. NZPA
