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SVYR v FCT [2022] AATA 3994 – AAT finds phone accessory retailer liable to pay GST on ‘shortfall’ amount
The taxpayer in this case was a mobile phone accessory retailer and branded agent for a telecommunications provider (Telco). Under their arrangement, the taxpayer participated in various promotions, including an Accessory Repayment Option (ARO). Under the ARO, the taxpayer would invoice its customers for the full price of accessories provided to them and provide credit for an amount Telco had promised to pay on their behalf. In reality, Telco would pay the taxpayer a lesser amount than what was listed on a customer’s invoice (e.g. $196.80 vs $240).
In affirming the objection decision under review, the AAT held the taxpayer was liable to pay GST on the full price notwithstanding the discount as:
- the taxpayer had failed to prove that Telco had made taxable supplies to it for which the shortfall amounts were consideration (and was therefore not entitled to input tax credits in respect of those amounts); and
- the arrangements for Telco’s provision of credit to the taxpayer’s customers did not involve any event that had the effect of changing the consideration for the taxpayer’s supply of accessories (and the taxpayer was therefore not entitled to decreasing adjustments in respect of the shortfall amounts).
Appeals
The taxpayer has appealed against the AAT’s decision in TDS Biz Pty Ltd v FCT [2022] AATA 3543 (covered in the Birchstone Brief for the week ended 28 October 2022) to the Federal Court.
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