The AAT has held that certain “incentive” payments by motor vehicle manufacturers and distributors were not consideration for a supply, with the result that overpayments of GST had been made by the taxpayer.
The taxpayer in this case is the GST representative member of a group of companies engaged in motor vehicle dealerships selling new and used vehicles throughout Australia. From time to time, the taxpayer receives “incentive” payments from those motor vehicle manufacturers or distributors. This case was about the GST treatment of incentive payments, which are commonly made by motor vehicle manufacturers and distributors to motor vehicle dealers. The essential issue was how the various payments should be characterised for GST purposes.
The AAT concluded as follows:
- Fleet rebates were consideration for a supply to the customer, but were not consideration for a supply to the manufacturer.
- Run-out model support payments were also consideration for a supply to the customer, but were not consideration for a supply to the manufacturer.
- Transit/interest protection payments were not consideration for a supply to the manufacturer.
- Retail target incentive payments were not consideration for a supply to the customer, nor consideration for a supply to the manufacturer.
- Wholesale target incentive payments were not consideration for a supply to the manufacturer.
As GST had been overpaid, the issue of refunds was discussed. However, while the Tribunal noted submissions by the Commissioner that the ATO had advised the taxpayer that it was not entitled to a GST refund in respect of the incentive payments it had received from the manufacturers, the AAT said that conclusion seemed to be based on the Commissioner’s view that the taxpayer had not overpaid GST in the first place. However, the Tribunal said it was unclear what document recorded the Commissioner’s decision to withhold the refund under s 105-65 in Sch 1 of the TAA.
Since the AAT therefore effectively found that the taxpayer had overpaid GST in respect of the transit/interest protection payments, the retail target incentive payments and the wholesale target incentive payments, it considered there would be need to be some adjustment made to the Commissioner’s assessment. However, for the time being, it delayed making a formal decision until it resolved the s 105-65 issue. It invited the parties to provide further submissions on issues surrounding possible refunds of overpaid GST.
(AAT Case [2012] AATA 409, re A.P. Group Limited and FCT, AAT, Frost DP and Deutsch DP, AAT Ref: 2011/1981, 2 July 2012)
[LTN 126, 3/7]