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The Full Federal Court (Kenny and Middleton JJ, Dowsett J dissenting) has upheld the Commissioner's appeal from the decision of Emmett J, who had held that payments made by the holders of credit cards and charge cards to the issuers of such cards (companies in the American Express group), following default by the holders, did not constitute consideration for or in connection with a "financial supply" within the meaning of s 40-5 of the GST Act and reg 40-5.09(1) of the GST Regulations.

On appeal, the Commissioner argued that the fee payments were "revenue derived from input taxed supplies" and, when included in the numerator of a formula that had as its denominator total revenue, the formula could be used as a "proxy" in determining the extent of creditable purpose (and thus creditable acquisitions) for the purposes of the (different) formula in s 11-30(3) of the GST Act.

Although the GST Act does not use the expression "revenue derived from input taxed supplies", it had first been suggested by the Commissioner in a public ruling as a way of determining the extent of creditable purpose, and had been accepted by the taxpayers as an appropriate method in determining the extent of their creditable purposes.

Prior to the appeal, however, all parties had accepted that "revenue" equated with "consideration" as the latter term is defined in the GST Act. Emmett J held that the fees were not consideration as defined. On appeal, the Commissioner argued that revenue was different from consideration, and Kenny and Middleton JJ agreed, holding that the fee payments were clearly "revenue", and clearly revenue derived from input taxed supplies.

This finding was adverse to the taxpayers as it reduced the extent to which they could claim input tax credits on their acquisitions. On the basis of this finding, the Court upheld the appeal and upheld the Commissioner's objection decision: FCT v American Express Wholesale Currency Services Pty Limited [2010] FCAFC 122 (Full Federal Court; Dowsett, Kenny and Middleton JJ; 17 September 2010).


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