2011 – a year in review for GST

This is my last post for 2011.  I want to thank all of you who have supported this site and wish you all a great holiday.  I will be back on line in January 2012, which should be another big year for GST – starting with the Qantas special leave application.

Summary of the year

This year was all about GST refunds.  The Multiflex case is a great example – the Commissioner went all the way to the High Court in a frantic effort to justify his refusal to comply with the mandatory language of s 35-5 of the GST Act and pay a refund of input tax credits to the taxpayer.  We also had Qantas, International All Sports  and Central Equity plus some Tribunal cases all seeking GST refunds.  It remains to be seen whether this activity continues in 2012.

We are all waiting to see what the High Court does in Qantas.  Is it just another characterisation case or does it go to the very fabric of the GST system?

2011 also saw a lot of activity with respect to GST and government.  At least two Court proceedings were issued by government entities (including State and local government) against the Commissioner.  These cases did not proceed to hearing, but they serve to illustrate some of the flaws in the way the GST Law (which includes the GST Act and the TAA) may (or may not) apply to particular layers of government and particular types of government transactions.

On 1 July 2011 GST entered into the general private ruling regime, with objection and review rights, which has brought its own controversies.  Probably the most controversial is the capacity of the Commissioner to effectively legislate by ruling.

On 1 July 2012 GST enters into the realm of self-assessment.  No doubt there will be teething issues, but hopefully that will reduce some of the confusion which has stemmed from the disconnect between Business Activity Statements, assessments and time limits in Schedule 1 to the TAA.

The GST continues to develop and I expect that 2012 will bring a broad range of new and interesting issues.

Case Highlights 

High Court

  • Commissioner of Taxation v American Express Wholesale Currency Services Pty Ltd – the High Court refused the Commissioner’s special leave application denied, but only after a full day’s hearing before an extended bench.
  • Lansell House Pty Ltd v Commissioner of Taxation – the High Court refused the taxpayer’s special leave application – this was probably the first time the High Court has had to look at the taxable treatment of crackers!
  • Commissioner of Taxation v Multiflex Pty Ltd – the High Court refused the Commissioner’s special leave application – another GST refund case – the whole process from judgment of the trial judge in the Federal Court (30 September 2011) to the hearing of the special leave application (9 December 2011) took about 10 weeks!
Full Federal Court
  • Commissioner of Taxation v Luxottica Retail Australia Ltd – the Full Federal Court dismissed the Commissioner’s appeal and found that the formula in s 9-80 of the GST simply did not work.  Arguably the most disappointing aspect of this case is that the Commissioner did not appeal the Tribunal’s decision on s 105-65 of Schedule 1 to the TAA, thus depriving the Full Court the opportunity to make some definitive statements about the operation of this difficult section
  • Qantas Airways Limited v Commissioner of Taxation – the Full Federal Court allowed the taxpayer’s appeal in full in a landmark decision – not surprisingly, the Commissioner has filed an application for special leave to appeal to the High Court, which should be heard early in 2012
Federal Court
  • Reglon Pty Ltd v Commissioner of Taxation – the first real GST on the treatment of damages – the Commissioner did file an appeal, but it was discontinued
  • International All Sports v Commissioner of Taxation – another GST refund case, this time about gambling supplies.  The Court also awarded indemnity costs against the Commissioner, which illustrated the potential scope for offers of compromise in the tax arena.
  • Central Equity Limited v Commissioner of Taxation – a case about the time of supply of real property and the transitional rules.  The taxpayer has appealed.  The Court also found that the refund notification was valid for the purposes of s 105-55 of Schedule 1 to the TAA.


  • MTAA Superannuation Fund (RG Casey) Property Pty Ltd and Commissioner of Taxation and National Jet Systems Pty Ltd and Commissioner of Taxation – another GST refund case, this time about s 13 of the GST transition Act and the scope of the Commissioner’s discretion in s 105-65 of Schedule 1 to the TAA where there is a “windfall gain” to the taxpayer or the recipient of the supply – both taxpayers have filed appeals to the Full Federal Court

Big issues for 2012?

Looking into my crystal ball, I see the major issues for 2012 to include:

    • GST refunds and s 105-65
    • The introduction of the self-assessment regime
    • Input tax credit recoveries for financial institutions
    • Transactions with government entities – the virtual world of the “notional” GST
    • Real property (as always)
    • The impact of the decision in Qantas (whichever way it goes)
    • An increase in the GST rate??

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