Birchstone Brief for the week ended 15 April 2022

ATO Updates

ATO Guidance: Notional GST Dispute Resolution

The ATO has released Guidance concerning the notional GST dispute resolution process for government entities. A separate dispute resolution process for notional GST disputes is necessary as legal objection and review rights are not available under the Taxation Administration Act 1953 (Cth) in respect of notional GST matters.

Relevantly, the Guidance provides:

  • an overview of the process for a State or Territory government entity to dispute the Commissioner’s position on a notional GST matter; and
  • a summary of relevant legal issues and principles that have arisen in notional GST external reviews.


The ATO has issued the following rulings:

  • CR 2022/37 – Commonwealth Bank of Australia – CommBank PERLS XIV Capital Notes;
  • CR 2022/38 – Australian Pharmaceutical Industries Ltd – Scheme of arrangement, ordinary dividend and special dividend; and
  • PR 2021/1A1 – Addendum to PR 2021/1 – Income tax: Challenger Guaranteed Annuity (Short Term).

State Taxes

Land Tax (NSW): 2021 COVID-19 relief guidelines updated

Revenue NSW has updated its Guidance pertaining to the 1 July 2021 – 31 December 2021 land tax COVID-19 relief program, which provides land tax relief of up to 100 percent to commercial and residential landowners who provide a rent reduction to a tenant experiencing financial distress as a result of the COVID-19 pandemic.

The update clarifies that landowners who have submitted an application for land tax relief must notify Revenue NSW by submitting an amended application by 30 April 2022 if their circumstances changed as a result of rent negotiations conducted after their original application was submitted.



Automotive Invest Pty Ltd v FCT (Gosford Classic Car Museum) [2022] FCA 281 – Luxury car tax adjustments

The Federal Court has held that a taxpayer which sold vintage motor vehicles exhibited at its car museum was liable to increasing luxury car tax adjustments as the vehicles were not solely used as trading stock.

The taxpayer company owned and operated the Gosford Classic Car Museum, which housed over 400 vehicles and was a tourist attraction open to the general public in return for payment of an admission fee. During its first full financial year of operation the taxpayer received revenue of $1.32 million from admission fees and around $4.39 million from car sales. The Commissioner determined the taxpayer was liable to pay luxury car tax and GST for the periods between June 2016 and November 2017 on the basis that:

  • the taxpayer had increasing luxury car tax adjustments under sections 15-30(3) and 15-35(3) of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act) once cars were placed in the museum (and therefore not solely used as trading stock); and
  • the input tax credits the taxpayer could claim in respect of the vehicles were therefore limited to 1/11th of the car limit under section 69-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Following an application by the taxpayer, the Federal Court found that the Commissioner was correct to impose the increasing luxury car tax adjustments as the vehicles were not only used by the taxpayer for the purpose of holding them as trading stock. As a consequence, the Court also found that the Commissioner was correct to limit the applicant’s input tax credits in respect of those vehicles exhibited in the museum to 1/11th of the car limit. However, the Court agreed with the taxpayer that section 69-10 did not apply to its acquisition of vehicles that were not taxable supplies (such as its purchase of secondhand vehicles from individuals not carrying on an enterprise). On that basis, the Court found that the taxpayer was entitled to full input tax credits for such acquisitions by virtue of section 66-5 of the GST Act and that the Commissioner’s assessments were therefore partially excessive.



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