06 Aug 07 ATO to seek Special Leave in Reliance CarpetIn a media release issued on 3 August 2007, the ATO advised that it will seek special leave to appeal to the High Court against the recent decision of the Full Federal Court in Reliance Carpet Co Pty Ltd v FCT  FCAFC 99, in which the Full Federal Court held that no GST was payable on the forfeiture of a security deposit.
The Full Federal Court’s decision is in contrast to the views expressed by the ATO in Goods and Services Tax Ruling GSTR 2006/2 entitled "Deposits held as security for the performance of an obligation".
In the interim, the ATO has advised that anyone seeking a refund for GST paid on a forfeited security deposit should notify the Commissioner in writing of their intention to do so, to ensure that they are not prejudiced by time limits on refunds. Such notification is required within 4 years of the end of the tax period to which the amount relates. Any requests for refunds received will be held pending the outcome of the High Court proceedings. There will also be a requirement that any refunds of GST be passed on to customers where that is required by the law.
For a copy of the ATO media release No 2007/39, 3 August 2007, go here