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16 Feb 11 Decision Impact Statement - Secretary to the DOT (Vic)

The ATO has issued a Decision Impact Statement in relation the Full Federal Court's decision in FCT v Secretary to the Department of Transport (Vic) [2010] FCAFC 84; 2010 ATC 20-196; 76 ATR 306.

The case concerned whether a subsidy provider (the Department of Transport (Vic) (DOT), made creditable acquisitions in respect of subsidy payments it made to taxi-cab operators and was therefore entitled to input tax credits under the GST Act. The subsidy payments were made under the Multi Purpose Taxi Program (MPTP) in respect of Victorian residents who suffer from a severe and permanent disability and are unable to independently access public transport.

A majority of the Full Federal Court (Kenny and Dodds-Streeton JJ) held that the DOT made creditable acquisitions in respect to the payments it made under the MPTP.

The majority held that a taxi-cab operator made two supplies: the supply of transport to the passenger and the supply to the DOT of the service of transporting the MPTP member. The subsidy payment was consideration for the supply to the DOT and therefore the DOT acquired a taxable supply from the taxi-cab operator for the purposes of s 11-5(b).

The Decision Impact Statement states that the Commissioner considers that, as a result of the decision, a broader approach than that taken by the ATO to date when analysing subsidy arrangements of this kind is required. Accordingly, there are a number of ATO Public Rulings and Determinations that consider the identification of supplies made under multi-party arrangements that will be reviewed and updated where required, including:

  • the application of propositions 9 and 12-15 of GSTR 2006/9 which sets out the Commissioner's views on supplies;
  • the Commissioner's views on supplies of rights and obligations in the context of grants of financial assistance as set out in GSTR 2000/11;
  • the need to identify binding obligations when analysing multi-party insurance arrangements as referred to in GSTR 2006/10; and
  • GSTD 2006/1 concerning whether a payment from a non-resident car manufacturer to an Australian distributor under an offshore warranty chargeback arrangement could be consideration for a supply.

This will include considering the implications of the Full Federal Court decision in TT-Line Company Pty Ltd v FCT (2009) [2009] FCAFC 178; 181 FCR 400 which also concerned a subsidy arrangement.


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