On Friday the Full Federal Court handed down its decision in MBI Properties v Commissioner of Taxation  FCAFC 112 where it allowed the taxpayer’s appeal against the decision of the Federal Court in MBI Properties Pty Ltd v Commissioner of Taxation  FCA 56.
The Full Court agreed with the taxpayer that it did not have an increasing adjustment pursuant to Division 135 of the GST Act where it acquired, as a going concern, residential premises which were leased. This was because the supply was made on the grant of the lease and that while the lease (being the subject of the supply) may have continued, the supply made on the grant did not. The Full Court also agreed that on its proper statutory construction, s 135-5(1)(b) only applied to supplies made by the acquirer of the enterprise.
The decision is an important one and it will be interesting to see whether the Commissioner seeks special leave to appeal to the High Court.
My analysis of the decision can be accessed here.