Commissioner of Taxation v Unit Trend Pty Ltd [2013] HCA 16: Goods and Services Tax

The High Court has today handed down a judgment concerning the interpretation of s 165 5(1)(b) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) in the case of Commissioner of Taxation v Unit Trend Pty Ltd [2013] HCA 16.

The Facts

Unit Trend Services Pty Ltd is the representative member of a GST group of companies which, at the relevant time, included Simnat Pty Ltd, Blesford Pty Ltd and Mooreville Investments Pty Ltd.  Simnat was the developer of residential building unit projects.  When construction of the projects was at an advanced stage, Simnat sold the projects for their then value as going concerns to Blesford and Mooreville, which completed the projects and sold the completed units.

The Commissioner of Taxation issued a declaration to Unit Trend under the anti-avoidance provisions in Div 165 of the A New Tax System (Goods and Services) Tax Act 1999 (Cth) negating a total GST benefit in excess of $21 million.

The Appeal

This declaration was contested by Unit Trend in the Administrative Appeals Tribunal, which found in favour of the Commissioner.  The AAT found that the companies were engaged in a "scheme" under s 165-10(2) of the Act.  The GST benefit got from the scheme, which Div 165 was being invoked to negate, was the benefit obtained as a result of intermediate sales by Simnat to Blesford and Mooreville of a going concern.

The Administrative Appeal Tribunal's decision was subsequently overruled by the Full Court in favour of Unit Trend.  The Full Court held that the GST benefit obtained by Unit Trend was attributable to the making of a choice, election, application or agreement expressly provided for by the GST Act and, therefore, Div 165 did not apply.

The High Court

On appeal by special leave to the High Court, the issue before the Court was whether the GST benefit obtained by Unit Trend was not attributable to the making of a choice, election, application or agreement that was expressly provided for by the GST Act.  The High Court unanimously held that the phrase "not attributable to" in s 165-5(1)(b) is concerned with whether the GST benefit in question is not one to which the taxpayer was entitled by exercise of a statutory choice. 

Reference to the undisputed facts showed that the GST benefit in question was not attributable to the making of a statutory choice by Unit Trend provided for by the GST Act.  The GST Benefit was, therefore, negated by the anti-avoidance provisions in Div 165.

Sign up for a free trial to our TimeBase GST Point in Time Service and gain current and accurate access to Australian tax legislation.