Ever paid for a non-refundable flight and had something come up which prevented you from flying? If this was with Qantas, would you consider that the airline has provided you a service even though you didn’t fly?
A landmark court case ruling handed down today determined that regardless of whether a person used their ticket or not, if Qantas charged a customer for a flight then it had provided a service, and therefore owed the Australian Tax Office (ATO), GST on all tickets, including those where the passenger was unable to fly.
The ATO claims that Qantas (and its budget carrier Jetstar) owed $26.6 million in GST for unused non-refundable tickets and a further $7.6 million in GST on refundable fares for which the person booking them never claimed a refund.
The argument from Qantas had always been that as they never provided a flight to those people (even though they received payment), then they didn’t have to pay GST. However, the High Court found otherwise. It ruled that in offering a fare and then receiving a booking that Qantas had made a “taxable supply”, or in other words, provided a service.
What about other non-refundable tickets or bookings?
At Etax Accountants, we’ll be watching closely to see if this case has set a precedent for other similar claims the ATO could potentially make. For example, will the courts see a hotel stay in which the person who pays up front doesn’t show up in the same light? Or what about a non-refundable tour or cruise paid for in advance which the person can no longer go on?
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