Wednesday, October 03, 2012

Qantas. Why the "unattractive" Australian lost in the High Court

If you charge for it, it's a service

Qantas has failed in an audacious and “unattractive” bid to get back $34 million in goods and services tax it has collected from its customers but didn’t want to hand over to the Tax Office.

Its argument - rejected by four of the five judges who heard the case - was that because the customers had paid airfares without taking flights it had not supplied a service as required to be liable for GST.

The one judge who did back Qantas, Justice John Dyson, did so despite a “superficially unattractive” feature of its position.

“The respondent seeks to acquire money paid by passengers who intended or expected that it would end up in the hands of the [Tax Office]” he said.

“If the respondent's argument is correct, the passengers who have not claimed their fares back have left the respondent in a position to gain money which it was never meant to have.”

Qantas was seeking back $26.6 million in GST it and its subsidiary Jetstar collected on forfeited flights in the first eight years of the tax and a further $7.6 million in GST it collected on tickets for which customers had never bothered to claim refunds.

Tax Institute senior counsel Robert Jeremenko said if Qantas had won it would have held onto money never intended for it...

“It’s good news for Qantas customers who have forfeited their fares. At least now they know 10 per cent of what they lost will be coming back to them via state government services rather than being kept by Qantas,’ he said.

If Qantas had won the case the benefits would have flowed through to concert promoters, organisers of sporting events and hotel operators all of whom would have been able to claim they need not pass on GST they have collected from no-show customers because they did not provide a service.

Qantas said in a statement it was “disappointed” and would not be out of pocket because it had already handed over the GST.

In today's Sydney Morning Herald

Related Posts

. No flight, no service, no tax says Qantas

. Our GST. Expensive, clunky, too low

. Why the GST is failing, and why it's hard to fix