Australian GST ruling could hit Kiwi firms
A landmark Australian tax ruling that has forced Qantas to repay A$34 million (NZ$42.5m) in GST could implicate Kiwi businesses operating across the ditch.
The beleaguered airline collected millions in GST from passengers who didn't show up for flights, but will now have to fork it over to the Australian Tax Office (ATO).
After years of legal wrangling and court proceedings, the High Court of Australia has ruled that GST can apply, even when no actual supply has taken place.
PwC New Zealand partner and GST expert Eugen Trombitas said the case would impact many Kiwi businesses GST registered in Australia.
It could apply to those that charged cancellation or forfeit fees, or where customers did not exercise a refund claim.
''Any situation where you prepay for a service or your goods- think tourism and leisure, some retail arrangements,'' said Trombitas.
He expected the ATO to put out a statement explaining what the judgment means across all industry sectors.
There was also a possibility that the ATO's legal success could spark it to retrospectively pursue other companies.
''There's a longstanding principle of law that a court case just affirms what the law's always been...but in practice they might say from this date on this is how we're going to apply.''
For companies operating on this side of the Tasman, Trombitas said it was business as usual.
New Zealand GST law was slightly different, and courts would likely follow the reasoning that no supply of services had actually taken place, he said.
"New Zealand case law has traditionally given 'supply' a practical meaning."
There had to be "mutuality" between the parties for a supply to take place, he said.
"For example, a person cannot receive a haircut -or hairdresser services- if they don't go to the hairdresser or miss their appointment. The same applies to air travel - if you don't fly how can there be a supply of travel?"
In June this year, Qantas warned that its profits would slump by up to 90 per cent due to deeper losses at its international operations, weak travel demand and soaring fuel costs.
The airline is the parent company of local carrier Jetstar.
- © Fairfax NZ News