Today the Commissioner issued an Interim Decision Impact Statement for the decision of the Full Federal Court in ATS Pacific Pty Ltd v Commissioner of Taxation [2014] FCAFC 33. I also note that on 23 April 2014 the taxpayer lodged an application to the High Court for Special Leave against the decision.

The case involved the proper characterisation of the supply by Australian travel agents or tour operators to non-resident travel agents or tour operators in booking or arranging accommodation, goods and services for the customers of the non-resident travel agents or tour operators, namely the non-resident tourists. My analysis of the decision of the Full Federal Court can be accessed here. I published an analysis of the decision of the primary judge at the time of judgment and I have extended that analysis to include the appeal.

The Full Federal Court allowed the Commissioner’s cross-appeal against the finding of the primary judge that there were two supplies, the supply of a promise to ensure that the products would be supplied to the tourists (taxable) and the supply of arranging or booking services (GST-free), and found that the taxpayer made only one supply which was wholly taxable.

In the Decision Impact Statement the Commissioner notes that some taxpayer have lodged GST returns based on the primary judge’s decision (i.e., not paying GST on the margin) and confirms that he will only seek to recover under paid GST if, after finalisation of the High Court proceedings, the decision of the Full Court stands. The Commissioner does note that taxpayers have the option to self-revise their GST returns now and voluntarily paying GST, pending the High Court appeals – and if this is done, any GIC will be fully remitted.

The Commissioner also states that he will cease to consider taxpayers’ requests to exercise the discretion under s 105-65 of Schedule 1 to the TAA for refunds of GST paid in previous tax periods pending the outcome of the High Court appeal.

The issue of s 105-65 and refunds may also be relevant if a taxpayer elects to take up the Commissioner’s offer and amends their GST returns and voluntary pays GST. The Decision Impact Statement is unclear as to whether the Commissioner would seek to apply s 105-65 to restrict the refund of those voluntary payments if the High Court allows the taxpayers appeal.

Comments on the Interim Decision Impact Statement are due by 30 May 2014.