Federal Court finds that supply of tour packages to overseas tourists was taxable

The Federal Court yesterday handed down its decision in ATS Pacific Pty Ltd v Commissioner of Taxation [2013] FCA 341 where it agreed with the Commissioner that ATS made a taxable supply to overseas travel agents where the travel agents arranged tour packages for overseas tourists in Australia comprising Products (being accommodation, goods and services) acquired and paid for by the taxpayer. The Court rejected the taxpayer’s argument that the supply was of the “booking and arranging” of the Products (for use by the tourists) and was GST-free as those supplies were not consumed in Australia. The Court did agree with the taxpayer’s alternative argument that the “margin” charged to the travel agents over and above the cost of the Products was GST-free.

The Federal Court also rejected the taxpayer’s contention that the Commissioner’s discretion to refuse to pay refunds of GST in s 105-65 of Schedule 1 to the TAA (being the form that applied prior to 1 July 2008) did not apply because the section only applied to “an actual taxable supply”.

My analysis of the decision can be found here.

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