GST

The Federal Court has just handed down the latest decision (MBI Properties Pty Ltd v Commissioner of Taxation [2013] FCA 56) about the GST treatment of the supply of an apartment within the Sebel Manly Beach development, which has been the subject of a series of cases more widely known as South Steyne. This decision illustrates the need to carefully consider the risks before applying the popular GST going concern concession.

The High Court has issued its much anticipated judgment as to whether Qantas is liable to pay GST on forfeited fares and on fares where the customer failed to claim an available refund for an unused ticket.

The Australian Government recently released draft legislation which proposes to restrict the ability of taxpayers to claim refunds of overpaid GST. This will be particularly important for anyone considering undertaking a residential development or selling land under the margin scheme, as it will mean that any overpayment of GST as a result of incorrectly applying the margin scheme will potentially be lost forever (whereas under the current rules, the supplier at least has an opportunity to seek a refund of that overpaid GST).

You should be aware of the risk of incorrectly calculating the margin GST payable on each lot when involved in developments with a residential component. This alert explains the proposed changes.

The Australian Taxation Office (ATO) has recently issued a draft public ruling GSTR 2012/D2 (Draft Ruling) in relation to the GST treatment of retirement village exit fees. The Draft Ruling will affect both charitable and commercial operators of loan-lease retirement villages.

The Federal Government has issued draft legislation changing the GST treatment of new residential premises constructed under development arrangements with government entities. On 23 November 2011, the Tax Laws Amendment (2011 Measure No.9) Bill 2011 was introduced as announced by the Assistant Treasurer earlier this year.

Two recent Federal Court decisions have significantly narrowed the ability of the Commissioner of Taxation to apply his discretion to withhold GST refunds. Accordingly, taxpayers who have outstanding GST refunds now have the opportunity to seek the release of these refunds in a timely fashion.

The Federal Government has recently announced proposed GST changes which will directly affect property developers. As part of its draft legislation, the Government proposes that developers' sales of new residential premises which are constructed under a development lease arrangement, will be treated as taxable supplies and not input taxed supplies. The ATO has also announced that it will release GST refunds to developers for GST overpaid in margin scheme transactions.

Every day the calls from business, industry and academia grow louder for the October Tax Summit to address the rate and base of GST.  While the Treasurer has steadfastly refused to incorporate GST into the summit's terms of reference, it is increasingly obvious that any meaningful tax reform must involve consideration of the GST.