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24 Jun 09 Council credit card fee not always subject to GST - Waverley Council

In a very unusual case, the AAT (Downes J, President, and Frost M) has held that a credit card "administration fee", being an additional fee payable by persons who paid Waverley Council charges with a credit card, was only subject to GST if the “underlying” tax, fee or charge that the credit card was being used to pay was itself subject to GST. The case is unusual because the Council was arguing that the administration fee always attracts GST, irrespective of the GST status of the underlying transaction and, accordingly, that the refund of GST to which it was entitled was less than that assessed by the Commissioner.

The AAT said, at para 42:

"The question comes down to one of characterising the credit card administration fee – either as a stand-alone fee in itself, or as part of the “underlying” tax, fee or charge that the credit card is being used to pay. We think that the fee is correctly characterised as part of the fee for the underlying supply. The person procuring the supply is buying, for example, a parking permit. There is one payment. In a practical sense there is one supply. This is the “practical” (see Saga Holidays Limited v FCT [2006] FCAFC 191; (2006) 156 FCR 256 at [70]; Sterling Guardian Pty Limited v FCT [2005] FCA 1166 at [38]; (2005) 220 ALR 550; and Re AGR Joint Venture and FCT [2007] AATA 1870 at [32]) application of the tax. This is the interpretation which is not “unduly technical or overly meticulous and literal” (see Saga Holidays Limited v FCT [2006] FCAFC 191; (2006) 156 FCR 256 at [70]; and Re AGR Joint Venture and FCT [2007] AATA 1870 at [32]). The approach adopted by the Commissioner is therefore correct."

Waverley Council and FCT [2009] AATA 442 (AAT; Downes J, President, and Frost M; 19 June 2009).

For a copy of the decision, go here

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