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10 Feb 14 Decision Impact Statement - AP Group Ltd

The ATO has updated its Decision Impact Statement in relation to the decision of the Full Court of the Federal Court in AP Group Ltd v FCT [2013] FCAFC 105; 2013 ATC 20-417. It was first published on 15 November 2013.

The Decision Impact Statement outlines the ATO's response to this case which concerns the GST treatment of various incentive payments made by motor vehicle manufacturers to the taxpayer, a motor vehicle dealer.

The Court concluded that none of the payments constituted consideration for supplies made by the dealer to the manufacturer, as none of the acts done by the taxpayer represented supplies made to the manufacturers.

The Decision Impact Statement then states:

"...Edmonds and Jagot JJ noted that the relationship between the taxpayer and each manufacturer involves 'a whole raft of obligations from one to the other' and contemplates a 'continuing dialogue' between the parties in which 'promises are routinely exchanged'. Their Honours stated that the 'so-called supplies for consideration identified by the Commissioner are nothing more than the encouragement of an overall business relationship between the manufacturer and the dealer to the mutual benefit of both', and that 'to characterise this dialogue as involving supply after supply is unrealistic and impractical'. Their Honours further observed that there was 'no basis to infer that the taxpayer would not behave in the same way for free'."

However, the Court found that fleet rebates and run-out model support payments were consideration for supplies made by the dealer to its customers, while retail and wholesale target incentive payments were not consideration for any supplies made by the dealer to its customers.

The Decision Impact Statement also outlines how dealers may claim a GST refund in respect of the payments found not to be consideration for any supplies.

The Decision Impact Statement notes that ATO ID 2008/166 "GST and motor vehicle industry incentive payments: fleet sales support - margin support - discretionary payments" has been withdrawn.

The Commissioner states that he is reviewing GST public rulings which discuss the terms 'supply' and 'supply for consideration' to determine whether any revisions are necessary.


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