17 Apr 13 GST: Travel company has mixed success on non-resident supplies - ATS Pacific
The Federal Court (Bennett J) has held that an Australian travel company, which carried on an enterprise of contracting for and making supplies to non-resident travel agents in relation to accommodation and other travel services in Australia ("Products") which were then provided to non-resident tourists by Australian service providers, was liable to GST in respect of the supply of the Products.
Specifically, the Federal Court held that the taxpayer contracted to supply, or ensure the supply of, the Products to the non-resident tourists, and their supply was not exempt under s 38-190 of the GST Act.
In contrast, the Federal Court held that the amount by which the fees charged by the taxpayer to the non-resident travel agents exceeded the cost of the Products (referred to in the judgment as "the margin"), being a fee for the arranging and booking service provided by the taxpayer (which the Court held was a separate supply), was GST-free pursuant to item 2 in the table in s 38-190(1) of the GST Act.
It was agreed that for tax periods from 1 July 2008, being part of the period in dispute, the Commissioner had not considered whether to exercise his discretion under s 105-65 of Schedule 1 to the Taxation Administration Act 1953 relating to refunds of overpaid GST and, accordingly, that the appropriate course would be to remit the matter to the Commissioner for his consideration.
ATS Pacific Pty Ltd v FCT  FCA 341 (Federal Court, Bennett J, 15 April 2013).