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04 Sep 06 ATO's views on FCT v DB Rreef

The ATO has published its view on the decision in FCT v DB Rreef Funds Management Ltd [2006] FCAFC 89 - see 2006 TAXVINE No 22 (9) (16 June 2006. In that case, the Full Federal Court held that s 13(5)(b) of the GST Transition Act did not apply to impose GST on rental payments as there was no opportunity for "a general review, renegotiation or alteration of the consideration" under the lease. Under the terms of the lease, only the rent payable for the premises (ignoring the fitout provided by the taxpayer) could be reviewed, which the Court held was only consideration for part of the supply, and not the whole of the supply which necessarily included the fitout.

The ATO says that it accepts the Court’s decision in DB Rreef in relation to the fitout works. However, it perceives that the particular features of the lease agreement were relatively unusual in this respect. It says that in light of the Full Federal Court’s decision, it will amend the relevant passage in GSTR 2000/16 Goods and Services Tax: transitional arrangements - GST free supplies under existing agreements, as soon as possible. Taxpayers who relied on the ruling as in force before this amendment to determine their GST position will have the protection of s 105-60 of Schedule 1 to the Taxation Administration Act 1953.

For a copy of the ATO's views, go here

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