The Full Federal Court has dismissed the taxpayer’s appeal and the Commissioner’s cross-appeal in a matter concerning the GST liability of a dealer for the sale of motor vehicles.
In AAT Case [2012] AATA 409, Re AP Group Ltd and FCT (2012) 83 ATR 493, a dealership sold motor vehicles under a floor plan arrangement. From time-to-time, it received incentive payments from motor vehicle manufacturers – these included fleet rebates and target incentive payments, spelt out in detail in separate agreements.
There were 5 types of incentive payments examined, of which 4 were subject to appeal.
For 2 of them, the Commissioner argued successfully before the AAT that the payments were in connection with a supply of the vehicle to the customer (and so qualified as consideration).
However, the other 2 incentive payments were not subject to GST as [they were not dependent on a sale of a vehicle to a customer and] they were not a supply of anything by the taxpayer to the manufacturer, rather the agreements set out the “foundation underpinning the relationships”, ie they set out the rules and did not involve a supply.
The Full Court unanimously dismissed the taxpayer’s appeal and the Commissioner’s cross-appeal, ie the AAT’s decision remains unchanged. It considered the AAT’s reasoning to be sound and it did not err in its conclusions.
(AP Group Ltd v FCT [2013] FCAFC 105, Full Federal Court, Edmonds, Jagot and Bromberg JJ, 23 September 2013.)
[LTN 184, 23/9/13]