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.