ATO Seeks To Test GST Ruling

by Mary Swire, for LawAndTax-News.com, Hong Kong

09 August 2007

The Australian Taxation Office (ATO) recently announced that is seeking special leave to appeal to the High Court against a decision of the Full Federal Court, which found that no GST was payable on the forfeiture of a security deposit.

The Full Federal Court’s decision was in contrast with the views expressed by the Tax Office in Goods and Services Tax Ruling GSTR 2006/2, entitled 'Deposits held as security for the performance of an obligation'.

“Both the scope of the definition of supply and the GST treatment of forfeited security deposits are important issues for the community,” Tax Commissioner Michael D'Ascenzo explained, continuing:

“On this basis we feel it is appropriate to seek to test the views of the Full Court before the High Court.”

The ATO has called on anyone seeking a refund for GST paid on a forfeited security deposit to notify the Commissioner in writing of their intention to do so, to ensure that they are not prejudiced by time limits on refunds. Such notification is required within four years of the end of the tax period to which the amount relates.

“Any requests for refunds received will be held pending the outcome of the High Court proceedings,” Mr D'Ascenzo concluded.

There will also be a requirement that any refunds of GST be passed on to customers where that is required by the law.

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