Commissioner publishes draft Addendum to ruling on cancellation fees and two ATO IDs

Yesterday the Commissioner published a draft Addendum to GSTR 2009/3 dealing with cancellation fees plus two ATO IDs dealing with the supply and transport of goods into Australia and increasing adjustments for unredeemed vouchers.

Draft Addendum GSTR 2009/3DA states that it amends GSTR 2009/3 to take account of the decision of the High Court in Commissioner of Taxation v Qantas Airways Ltd [2012] HCA 41, which considered the GST treatment of fares received for flights booked but not undertaken by prospective passengers. The High Court found that the fares were consideration for a taxable supply.

The thrust of the addendum can be found in proposed paragraphs 176A and 176B, which provide as follows:

176A. When an airline ticket is issued and the terms and conditions of the ticket are accepted by the customer, the supplier (usually the entity operating the airline service) enters into a contract with the customer.

176B. Accordingly, where a fare is paid to secure an airline ticket governed by contractually binding conditions of carriage in which the airline promises (subject to exceptions) to transport the passenger, it is considered that the airline makes a supply for consideration even if the passenger is subsequently a no-show.

Comments on the draft addendum are invited by 22 May 2013.

In ATO ID 2013/20 – GST and supply of goods and the transport of those goods into Australia the Commissioner takes the view that where a non-resident supplies goods to a recipient in Australia, that entity is not making a GST-free supply of international transport under paragraph (b) of item 5 in subsection 38-355(1) when it delivers those goods to the recipient in Australia. Rather, the supplier is making a composite supply of delivered goods to the recipient in Australia.

This ATO ID provides a guide as to the Commissioner’s application of his views in GSTR 2001/8 regarding mixed or composite supplies. The Commissioner’s approach was as follows:

If the delivery services are integral, ancillary or incidental to the supply of goods, the supply is a composite supply of delivered goods. A composite supply of delivered goods is treated as a single supply and takes its GST status from the dominant part of the supply, being the goods. If this is the case then Item 5 of the GST Act will not be relevant and therefore will not apply.

However, if the supply of goods and delivery has separately identifiable parts that require individual recognition due to their relative significance in the supply, the supply is a mixed supply…If the supply is a mixed supply then the delivery services can be considered separately to determine if that part of the supply meets the requirements of being GST-free under Item 5 of the GST Act.

The Commissioner took the view that the delivery of the goods was integral, ancillary or incidental to the dominant supply of goods.

In ATO ID 2013/24 – GST and increasing adjustments for unredeemed vouchers the Commissioner takes the view that an entity has an increasing adjustment under s 100-15 where it writes back to current income the unredeemed stated monetary value of expired gift vouchers. The Commissioner found that this was the case notwithstanding that historical data showed that some of these unredeemed vouchers could have been redeemed for GST-free supplies.

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