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The AAT has 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 $7,457,531.10) paid as part of the rent of a building under a lease agreement entered into in 1998, that is, prior to the date of Royal Assent to the A New Tax System (Goods and Services Tax) Act 1999.

The AAT so held because the taxpayer and the landlord (a Commonwealth Government Department) had agreed that, after 1 March 2001, the rental payable by the taxpayer would be different from that identified in the lease agreement. On this basis, the consideration for supplies after 1 March 2001 was not "identified or capable of being worked out" by the pre-Royal Assent date agreement, as required by s 13.

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 lessee or, if the refund were passed on to the landlord, to the landlord. The AAT concluded, at para 65:

"In the present circumstances there would be a windfall gain if a refund were to be made. Either the applicant would receive a windfall or the Department would, in circumstances where neither of them are, or have been, out of pocket on account of any overpaid GST. In these circumstances, if there was an amount refundable without consideration of the s 105-65 discretion, that discretion ought to be exercised and no refund made. A practical business approach to administration of the GST laws is not consistent with allowing windfall gains. And to the extent that community standards and expectations have a role to play, those standards and expectations would require denial of windfall gains for two large organisations that do not bear the cost of the overpaid amount."

MTAA Superannuation Fund (R G Casey Building) Property Pty Ltd and FCT [2011] AATA 769 (AAT, Justice Downes P and O'Loughlin SM, 31 October 2011).


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