On 22 December 2022, the Full Federal Court of Australia unanimously decided for the taxpayer in Commissioner of Taxation v Landcom [2022] FCAFC 204. The decision is a useful reminder of key principles in statutory interpretation:
Landcom, a state owned corporation in NSW that purchased, sold and developed real property, had applied to the Commissioner of Taxation (Commissioner) for a private ruling regarding the application of the margin scheme provisions in Div 75 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act).
In a private ruling application, Landcom asked the Commissioner to rule on whether the sale of the freehold interests in four lots would be a single supply or multiple supplies. The Commissioner was of the view that the amalgamated contract for the sale of land would be a single supply (rather than separate supplies of each of the lots). Landcom objected to the Commissioner’s private ruling, and then subsequently appealed the objection decision to the Federal Court.
There were two issues before the primary judge, Thawley J. The first concerned whether the Court had jurisdiction to entertain the appeal, as the Commissioner had contended that as the impost of GST on property belonging to a State was notional (due to s 114 of the Commonwealth Constitution), he was not authorised to either issue the private ruling or make an objection decision, and that these had been done as a courtesy in order to provide guidance to the taxpayer. Thawley J held that the Court did have jurisdiction, and there was no appeal against that conclusion before the Full Federal Court.
The second issue concerned the correctness of the opinion of the Commissioner expressed in the private ruling. Thawley J had held that, under Div 75, the margin is to be calculated by reference to the particular freehold interest sold, irrespective of whether or not that particular freehold interest was sold under contract for the sale of other freehold interests. The Commissioner appealed that conclusion arguing that Thawley J’s construction of Div 75 was incorrect because, in applying the GST Act, it is first necessary to identify the “supply” before ascertaining how to calculate the GST payable on that supply.
The Full Federal Court (Wigney, Moshinsky and Hespe JJ) agreed with the conclusions of Thawley J at first instance, and rejected the Commissioner’s construction, saying that it would be inconsistent with the structure of the GST Act and the statutory language. In dismissing the Commissioner’s approach the Court noted:
Taxpayers with similar margin scheme matters where an adverse decision or ruling has been given may wish to consider the implications of this decision and whether they have a basis to revisit that decision. More broadly, the case is a useful reminder of the approach a Court will take to matters of statutory construction.
Every Australian state and territory has now delivered its 2024-25 state budget. We summarise the most notable inclusions.
The rise of digitalisation has undeniably influenced global value chains. This transformation has led to the emergence of new business models associated with app stores, online advertising, cloud...
The Victorian Court of Appeal has entrenched as law a broad meaning of “associated transactions” in its recent decision involving Oliver Hume Property Funds and the Commissioner of State Revenue.