AppId is over the quota
The Commissioner has released a Draft GST determination (GSTD 2013/D1) setting out his view on the treatment of ‘single RE fees’. The Draft determination also sets out a suggested means of apportioning a single fee between 55% and 75% RITC rated elements.
On 8 May 2013, the Commissioner released GSTD 2013/D1, dealing with the application of item 32 of subregulation 70-5.02(2) of the GST Regulations to a single fee charged to a managed investment scheme (MIS) that is a recognised trust scheme from a Responsible Entity (RE). Comments are required by 5 June 2013, and the GSTD is proposed to apply from 1 July 2012, when item 32 came into operation.
Read our full Alert on the paper.
In the first GST general anti-avoidance matter to be considered by the High Court of Australia, the Court has unanimously allowed an appeal by the Commissioner of Taxation (Commissioner) in relation to the application of the GST general anti-avoidance rules (GAAR). In finding for the Commissioner, the High Court held that despite the taxpayer’s arrangement involving a series of choices or an agreement each of which were expressly provided for under the GST law (choices), the GST benefit obtained was “not attributable” to these choices, but to the wider arrangement.Read our full Alert on the paper.
The government has released a new exposure draft on the proposed changes to the GST refund rules which are still intended to take effect from 17 August 2012 (the date of the original announcement). While the new draft purports to address concerns with the initial version, it still leaves a number of questions for taxpayers.Read our full Alert on the paper.
A recent decision of the Federal Court involving the GST adjustment provisions has the potential to significantly impact property investors who have purchased residential premises as a GST-free going concern.On 6 February 2013, the Federal Court handed down a decision which may affect investors acquiring residential premises which are subject to lease. The case, MBI Properties Pty Ltd v Commissioner of Taxation [2013] FCA 56, follows the earlier decision of South Steyne Hotel Pty Ltd v Commissioner of Taxation [2009] FCAFC 155, in which the Full Federal Court held, among other things, that the sale to MBI of certain units in a serviced apartment complex subject to leases to a management company, were GST-free supplies of going concerns.
Read our full Alert on the paper.
In a majority decision, the High Court has found that GST is payable by Qantas when a customer books and pays for domestic air travel, but subsequently cancels the booking or does not turn up for the flight, and does not receive a refund of the unused fare.This case concerns the fundamental issue of whether in these circumstances, Qantas makes a supply to the passenger for consideration and therefore, whether the supply is a taxable supply pursuant to s9-5 of the A New Tax System (Goods and Services Tax) Act 1999.
Read our full Alert on the paper.
The Commonwealth Government has released exposure draft legislation which proposes to amend the goods and services tax (GST) law to ensure that overpayments of GST are only refunded in limited circumstances. On 17 August 2012, the Treasury released exposure draft legislation and explanatory material on changes to the rules concerning refunds of overpaid GST. These changes seek to address the implications of the Full Federal Court’s decision in All Sports v Commissioner of Taxation [2011] FCA 824 ('Sportsbet'). The Sportsbet decision meant that a taxpayer could obtain a refund for overpaid GST, without the need to repay this amount to the customer, where the excess arose due to a miscalculation of the GST payable.Read our full Alert on the paper.
On 29 May 2012, amendments to the GST financial services regulations were released, including wide ranging new regulations relating to the reduced input tax credit treatment of supplies acquired by managed investment schemes and superannuation funds. The new rules apply from 1 July 2012.The amendment regulations introduce a new item 32 of GST regulation 70-5.02(2) under which supplies acquired by a 'recognised trust scheme' on or after 1 July 2012 will be eligible for a 55 per cent reduced input tax credit (RITC). Certain specified services will remain eligible for the 75 per cent RITC.
The amendment regulations contain various changes to the exposure draft regulations issued by Treasury in January this year.
Read our full Alert on the paper.
Payers of financial assistance are typically, but not limited to, Governments, Government agencies, non-profit bodies and charities.
GSTR 2012/2 replaces a ruling which was relied on by many entities granting financial assistance in the Government and not-for-profit sector, where that financial assistance did not satisfy the requirements of a Government appropriation. While the core themes of GSTR 2000/11 remain the same in the new ruling, many of the examples have been updated and refined and the obligations arising as a result of grant payments explored in more detail to determine whether or not an obligation to remit GST falls on the recipient of a grant of financial assistance. Unlike the draft, GSTR 2012/2 does not consider the implications of financial assistance payments made under tripartite arrangements which is disappointing, given that so many Government grant arrangements involve a third party. Taxpayers will have to rely on the ATO's guidance in GSTR 2006/9 in that regard.
Unlike the old ruling, GSTR 2012/2 confirms that in relation to repayment clauses, these are no longer viewed by the ATO as determinative of a supply being made by the recipient of the grant payment. The new ruling contains an example of a situation where a repayment clause does not give rise to a taxable supply by the recipient of the grant funding payment.
The new ruling addresses situations where there is an insufficient nexus between the payment made by the grantor and a supply, such as where the thing supplied by the payee is merely incidental. It also provides a more comprehensive analysis of the creation of expectations between the parties and whether or not this gives rise to a supply (the original ruling stated that the creation of mere expectations was insufficient to create a supply).
Read our full Alert on the paper.
After a lengthy and at times frustrating consultation process with the States, Federal Treasury has finally released its draft regulations for Division 81 for broader consultation. While cutting it fine in terms of the looming deadline of 1 July 2012, the proposed draft is most welcome.Since the new principle based approach was announced in the 2010-11 Federal Budget, agencies were assured that the application of the new approach to its fees and charges would be a seamless one and that the treatment of fees and charges should be the same as in the old regime.
However, it became very clear very early on that this wasn't going to be the case. Since the legislation took effect from 1 July 2011 it was obvious that very serious surgery would be required to expand and clarify the application of Division 81 using the regulation making power if it was to work as intended.
Faced with the pending deadline of 1 July 2012 when the "grandfathering" period is currently due to expire, agencies (and the Australia Taxation Office (ATO), which has been inundated with ruling requests) have attempted to determine the likely GST treatment of fees and charges knowing full well that any initial determination made was likely to be affected - even overturned- by the pending regulations.
The proposed draft addresses the main concerns government agencies have had with the new Div 81 legislation. And even better, the Draft Regulations extend the "grandfathering" period by an additional 12 months to 1 July 2013, providing a much needed breathing space for agencies to accurately identify any changes required and seek certainty from the ATO where needed.
A more detailed analysis of the changes is set out below. The Draft Regulations and related documentation can be accessed on the Treasury website.
Read our full Alert on the paper.
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