Tag: GST

Proposed changes to GST on property transactions

Measures to strengthen compliance with the GST law in the property development sector have been introduced into parliament this week.

The Treasury Laws Amendment (2018 Measures No 1) Bill 2018 will amend several tax laws to require purchasers of new residential premises and new subdivisions of potential residential land to make a GST payment directly to the ATO as part of settlement from 1 July 2018.

This was announced in the 2017-18 Federal Budget, is designed to counter tax evasion where some developers collect GST from their customers but dissolve their company to avoid paying it to the ATO. Currently, developers may have up to three months to remit GST after the sale of newly constructed residential premises and new subdivisions, allowing dishonest developers to avoid their GST obligations.

The government claims that the cost impacts on purchasers using conveyancing services are expected to be minor, given this change leverages the existing disbursement process and the use of standard contracts.

CPA Australia understands and agrees with the intent of the Bill, though disagrees with the assumption that the change will have minimal impact on most purchasers.

The impact on the cash flow of builders could be quite significant

In its submission on the draft legislation, CPA Australia stated that it is the experience of its members that GST on property transactions can be complex, including calculating the GST payable, and that such transactions may be outside the skills of many BAS and tax agents, let alone conveyancers.

Missed a flight? You’ve missed the GST claim too.

In a decision handed down yesterday [Thur 1.9.2011], the Full Federal Court has unanimously upheld the taxpayer’s appeal in holding that it was not liable for GST on amounts received from passengers who booked and paid for domestic airline travel, but who subsequently cancelled a booking or did not appear for a flight and did not receive a refund.

The taxpayer contended that the air journey was the supply in contemplation, that it did not occur and therefore no supply occurred. The Full Court agreed, stating that it was “plain” that what each customer paid for was carriage by air. The Court said the actual travel was the relevant supply and if it did not occur, there was no taxable supply. (Qantas Airways Ltd & Anor v FCT [2011] FCAFC 113, Full Federal Court, Stone, Edmonds and Perram J, 1 September 2011.)

So Qantas has a win in being able to keep the full amount of fare paid by customers who didn’t fly. It doesn’t have to give the GST portion to the tax office.
The other side of this is that customer, had they been registered for GST and actually flown, would have been able to claim back the GST paid to Qantas. The corollary of this decision looks like it takes away the right to claim back the GST if the customer doesn’t actually fly. A missed flight costs 10% more than one that is caught.

Whether you have an enforceable claim against Qantas to get your GST back from them is a different question.