Today the Commissioner published his Decision Impact Statement for the decision of the Full Federal Court in AP Group v Commissioner of Taxation  FCAFC 105 which considered the GST treatment of various incentive payments made by motor vehicle manufacturers to dealers. The Full Federal Court heard an appeal by the taxpayer and a cross appeal by the Commissioner against the decision of the Tribunal in AP Group Limited and Commissioner of Taxation  AATA 617 (decision on principles  AATA 409).
The majority of the Full Federal Court (Edmonds and Jagot JJ) dismissed both appeals on the basis that they did not raise an error of law because the Tribunal properly applied the statutory test in s 9-5. Bromberg J dismissed the taxpayer’s appeal for the same reason, but dismissed the Commissioner’s cross-appeal for different reasons. The Full Court made detailed obiter statements and it is clear that the Court agreed with the Tribunal’s decision and would have confirmed those decisions if the appeals had raised an error of law.
The Decision Impact Statements states that the Commissioner is giving further consideration to what impact the decision has on his existing public views on “supply” and “consideration”. The preliminary views of the Commissioner are as follows:
- The Commissioner’s existing views on nexus to the effect that there must be a “sufficient” connection are not inconsistent with the Court’s observations on the term “for” in the phrase “supply for consideration”.
- Caution is required when determining whether the one set of actions give rise to more than one supply, but that does not necessarily require a change to GSTR 2006/9.
The Commissioner also notes as follows with respect to incentive payments:
- He is giving further consideration as to how the decision applies to other types of motor vehicle incentive payments
- He considers that the decision supports the view in GSTD 2005/4 that wholesale motor vehicle holdback payments are not consideration for supplies. However, the decision raises doubt as to whether retail holdback payments should continue to be treated as ‘out of scope’. On balance, the Commissioner considers that they remain out of scope.
My analysis of the decision of the Full Court can be accessed here.