In a decision handed down on Wed 20.6.2012, the Full Federal Court has dismissed a taxpayer’s appeal from an AAT decision that had denied the taxpayer’s claim that supplies made under amended pre-GST leases during the relevant periods were GST-free pursuant to s 13 of the GST Transition Act.
The taxpayer had claimed refunds totalling $7,457,531.10. It owned a building with its then partner from 1998 to 2009. The partnership leased part of the building pursuant to a long-term lease dated 24 April 1998. The lease spanned the whole of the period between the date of Royal Assent to the GST Act and 30 June 2005. The lease provided for rent reviews and the partnership and the tenant accepted that the rent component of the lease consideration was subject to GST. Some of the components of the lease – being the rent and car park components – were reviewed and increased in March 2001 and GST was paid on those components.
The Full Federal Court said the appeal concerned whether the taxpayer was liable to pay GST in respect of payments received from the Department of Foreign Affairs and Trade (DFAT) in the period between 1 March 2001 and 30 June 2005 under a lease dated 24 April 1998 commencing on 25 April 1998 with a term expiring on 28 February 2012.
The Court found against the taxpayer and dismissed all its grounds of appeal. It considered the AAT did not err in not finding that the rent review procedure in the Lease provided “a way of working out the consideration” payable for supplies made after the review date. So understood, the Court said, “s 13 did not apply to the relevant supplies”.
(MTAA Superannuation Fund (R G Casey) Building Property Pty Ltd v FCT [2012] FCAFC 89, Full Federal Court, Gilmour, Perram and Jagot JJ, 20 June 2012.)
[LTN 117, 20/6]