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18 Sep 1212 Decision Impact Statement - National Jet Systems

The ATO has published a Decision Impact Statement in relation to the AAT decision in National Jet Systems Pty Ltd and FCT [2011] AATA 766.

The case concerned the entitlement to a refund of GST paid pursuant to a 'wet lease' of certain aircraft. The GST had been passed on by the taxpayer to the recipient of the supply.

The AAT held that the taxpayer was not entitled, pursuant to s 13 of the A New Tax System (Goods and Services Tax Transition) Act 1999, to a refund of GST (totalling $48,314,320.35 ) paid to the Commissioner in respect of payments received from Airlink Pty Ltd, a subsidiary of Qantas Airways Ltd, for the provision of aircraft and services under a lease agreement entered into in 1999, that is, prior to the date of Royal Assent to the A New Tax System (Goods and Services Tax) Act 1999.

If the AAT were wrong in this regard, the AAT held that the taxpayer had given the Commissioner a valid notice for the purposes of s 105-55 of Sch 1 to the Taxation Administration Act 1953 and item 16(2) of Schedule 2 to the Tax Laws Amendment (2008 Measures No 3) Act 2008, but that the Commissioner correctly exercised his discretion to refuse the refund. This was because there would be a windfall gain either to the taxpayer or Airlink.

The Decision Impact Statement states that the AAT's decision has minor impacts on GSTR 2000/16. Rather than updating the ruling, the Commissioner proposes to withdraw the ruling.

The Commissioner will review MT 2009/1 and make changes as necessary to reflect the AAT's decision in this case and other recent cases.

The Commissioner does not propose to make any changes to MT 2010/1 in relation to the question of how the discretion under s 105-65 operates. It is also felt that the AAT's observations concerning windfall gains do not necessitate any change to MT 2010/1.


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