High Court GST case leaves industry in suspense
The High Court of Australia’s decision to uphold the Australian Taxation Office’s (ATO’s) right to charge goods and services tax (GST) on deposits forfeited on property deals fails to clarify how the issue will be treated in different circumstances and industries, according to Deloitte tax partner Andrew Nutman.
In the landmark case of Reliance Carpets v Commissioner of Taxation, Reliance Carpets argued it should not pay GST on the $300,000 it received as part of a 2002 deal to sell a $2.98 million commercial property in Melbourne that fell through. Yesterday, the court quashed a Federal Court ruling in Reliance’s favour.
While tax commissioner Michael D’Ascenzo welcomed the decision, Nutman argued that it “ultimately failed to address the treatment of deposits for GST purposes”.
“[B]usinesses involved in identical land and property transactions will need to ensure they have accounted for GST on deposits. But for businesses supplying land in differing circumstances and businesses in other industries that take deposits, particularly travel, tourism and major retail goods industries, this decision unfortunately does not provide certainty as to the correct GST treatment of forfeited deposits.
“Clearly, this is an issue that will ultimately need to be further clarified in the courts.”
Before the judgement was handed down, Nutman said that if the ATO lost, it could be forced to repay up to $1 billion in forfeited deposits.
Recommended for you
Technology firm Iress and investment manager Challenger have formed a strategic partnership to launch an adviser solution to better serve their retiring clients.
There have only been a “handful” of opportunities in the last 20 years when infrastructure has looked as cheap relative to equities as it does now, according to Lazard, making it a viable option to provide portfolio security amid market volatility.
The Australian Financial Complaints Authority has reported an 18 per cent increase in investment and advice complaints received in the financial year 2025, rebounding from the previous year’s 26 per cent dip.
EY has broken down which uses of artificial intelligence are presenting the most benefits for wealth managers as well as whether it will impact employee headcounts.
