The Full Federal Court has unanimously upheld the Commissioner’s argument that a supply made by an Australian inbound tour operator to overseas customers was fully subject to GST.
At first instance, the Federal Court held that the supply of a promise to provide travel products (such as hotel rooms, airport transfers etc) to non-resident tourists was not GST-free under item 2 of s 38-190(2) of the GST Act: ATS Pacific Pty Ltd v FCT  FCA 341. The Full Court affirmed this decision and dismissed the taxpayer’s appeal.
However, at first instance the Federal Court also held that there were 2 supplies made by the taxpayer. One was the promise to provide travel products, the second was the supply of arranging services. It held that this second supply was GST-free under item 2. The Full Court upheld the Commissioner’s cross-appeal, stating that the arranging services were “part and parcel of the promised package for which there is a single indivisible consideration”. This meant that the full consideration was subject to GST, rather than having the margin excluded as a GST-free supply.
(ATS Pacific Pty Ltd v FCT  FCAFC 33, Full Federal Court, Edmonds, Pagone and Davies JJ, 27 March 2014.)
[LTN 60, 28/3/14]