Tribunal decision on whether a supply of a going concern; ATO issues draft Practice Statement on Division 81 of the GST Act

In Brookdale Investments Pty Ltd and Commissioner of Taxation [2013] AATA 154 the Tribunal agreed with the Commissioner that the sale of land by the applicant was not GST-free as the supply of a going concern because there was no evidence that the parties so agreed in writing prior to the supply being made (ie, prior to settlement). The Tribunal also found that the notice issued by the Commissioner under s 105-50 of Schedule 1 to the TAA was valid and that Commissioner may have treated the acquisition by the purchaser as GST-free was not relevant to the application. That view is undoubtedly correct, although it does appear strange that the Commissioner could maintain a different GST treatment for the parties. It may be that the purchaser was out of time to recover input tax credits. My analysis of this decision can be accessed here.

The ATO has released ATO Practice Statement PSLA 3618 (GA) (draft) “GST treatment of Australian taxes, fees and charges under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 from 1 July 2013.

The practice statement sets out the administrative approach the ATO will take where Australian government agencies determine the GST classification of supplies that they make for which Australian fees and charges are received as consideration.

The ATO’s approach is as follows:

  1. subject (3) below, Australian fees and charges covered by the Treasurer’s determination that satisfy the requirements of s 81-10(1) and/or regulation 81-15.01 are exempt
  2. if an entity classifies Australian fees or charges as being ‘exempt’ in accordance with the Treasurer’s determination, the Commissioner will not disturb the treatment retrospectively
  3. those Australian fees and charges that are listed on the Treasurer’s determination that are regarded as being consideration for a supply will not be eligible to receive this treatment
  4. if an Australian fee or charge that receives this treatment is subsequently considered not to be exempt, the Commissioner will require the treatment to be changed prospectively.

The draft has been published for comments, which are due by 19 April 2013.

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