6. GST advice and dispute management

Advice and guidance

Our public and private advice and guidance positively influences taxpayers to get their obligations right from the start, ensures a level playing field and addresses GST risks.

Key private advice topics in 2023–24 included:

• GST international and cross-border
• tax administration and core provisions, including GST registration
• real property transactions
• food and health product classification
• financial supplies.

In 2023–24, we finalised 441 private ruling requests on GST issues, with 85% completed within 28 calendar days of receiving all the necessary information, exceeding our service standard of 80%.

With our continued focus to provide taxpayers with modern, effective and timely public advice and guidance at scale, one-to-one assistance through private rulings and guidance requests continues to decline.

This year we published the following public advice and guidance to explain the Commissioner’s view on GST issues:

• Draft Miscellaneous Taxation Ruling MT 2024/D1 Miscellaneous tax: time limits for claiming an input tax credit or fuel tax credit explains the 4-year entitlement period.
• Goods and Services Tax Determination GSTD 2024/1 Goods and services tax: supplies of combination food explains when a supply of food is taxable as a combination food by reference to the Administrative Appeals Tribunal (AAT) decision in Chobani v Commissioner of Taxation [2023] AATA 1664.
• Draft Goods and Services Tax Determination GSTD 2024/D1 Goods and services tax: supplies of food of a kind marketed as a prepared meal explains the meaning by reference to the Federal Court decision in Simplot Australia Pty Limited v Commissioner of Taxation [2023] FCA 1115.
• Updated the GST Detailed Food List Public Ruling to ensure alignment with the reasoning in GSTD 2024/1 to ensure transparency of our decision making. New entries included reflected common product types we provided an ATO position on through private rulings or compliance activities and priority updates raised through industry engagement.
• Draft Addendum to Goods and Services Tax Ruling GSTR 2006/6DC2 Goods and services tax: improvements on the land for the purposes of Subdivision 38-N and Division 75 outlines changes to reflect the Full Federal Court’s decision in Commissioner of Taxation v Landcom [2022] FCAFC 204.
• Decision Impact Statement on the Federal Court decision in Simplot Australia Pty Limited v Commissioner of Taxation [2023] FCA 1115.
• Decision Impact Statement on the Full Federal Court decision in Commissioner of Taxation v Hannover Life Re of Australasia Ltd [2024] FCAFC 23.

We also published content to our website providing clear and practical advice to taxpayers about:

• compression socks
• supplies related to the National Disability Insurance Scheme
• exports of services
• digital currency
• taxation of private public partnerships for social infrastructure projects
• small-scale land subdivisions sales
• GST obligations for content creators.

Table 6.1: Finalised GST-related advice and guidance

Request type	2019–20	2020–21	2021–22	2022–23	2023–24
Guidance cases	3,966	3,941	3,286	2,120	1,810
Private ruling requests	565	614	602	449	441

Table 6.2: Written technical advice – finalised in 28 calendar days of receiving necessary information (%)

Request type	2019–20	2020–21	2021–22	2022–23	2023–24
Guidance requests	98	95	90	92	88
Private rulings	98	99	96	92	85

Notes: GST Performance Agreement Schedule A 9e. This is a service commitment. An 85% target applies for general taxpayer requests and an 80% target applies to private rulings.

Table 6.3: Quality of technical advice (%)

Review rating	2019–20	2020–21	2021–22	2022–23	2023–24
Rated as ‘achieved’	94.4	100.0	97.0	97.5	99.0

Notes: GST Performance Agreement Schedule A 9f. Technical advice cases are assessed and rated for the accuracy of the technical decisions against 4 criteria: service, accountability, accuracy, and performance.

Dispute management

GST objections

Addressing GST objections is essential to maintaining trust and confidence in the tax system.

The large increases in objections as shown in Tables 6.4 to 6.6 below, are a result of:

• a significant reduction in audit cases created (57,000 in 2022–23 due to Operation Protego, down to 15,500 in 2023–24)
• non-engaged taxpayers later objecting decisions from automated processes
• firmer action, letters and outsourcing to debt collection agencies.

The majority of objection cases created (shown in Table 6.5 below) relate to:

• GST pre-issue program compliance cases, dealing with high-risk claimed refunds. Similarly to previous years, these cases accounted for over 50% of total objection cases created
• over 300 cases with contentions of fraud
• vulnerable taxpayers, especially situations involving coercive control, domestic violence, and capacity. These required the utmost sensitivity and empathy to address each case with care while determining the outcome. We are developing a specialised treatment to ensure appropriate support for genuine cases.

A smaller number of objections related to:

• unregistered preparers and suspected fraud by a tax agent
• GST property issues testing our large market segments. In response to our stronger compliance action, we expect to see increased objections in 2024–25.

Table 6.4: Audit to objection transition rate (number per 1,000)

Activity	2019–20	2020–21	2021–22	2022–23	2023–24
Audit to objection transition rate	95	56	11	30	126
Audit to audit-related objection transition rate	62	37	9	27	113

Note: GST Performance Agreement Schedule A 7c.

Table 6.5 Objection cases created

Activity	2019–20	2020–21	2021–22	2022–23	2023–24
Audit-initiated	421	267	528	1,519	1,748
Client-initiated	124	138	137	201	204
Other	0	2	0	1	0
Total cases created	545	407	665	1,721	1,952

Notes: GST Performance Agreement Schedule A 7a. The process for identifying GST-related objections improved in 2020–21 to capture all GST-related work items. Previously only cases where GST was the primary revenue product in dispute were included.

Table 6.6: Resolved objection cases

Activity	2019–20	2020–21	2021–22	2022–23	2023–24
Audit-initiated	n/a	426	413	1,127	2,007
Client-initiated	n/a	386	122	182	212
Other	n/a	1	0	0	0
Total cases resolved	512	813	535	1,309	2,219

Note: GST Performance Agreement Schedule A 7b.

Table 6.7: Proportion of objections to new Part IVC litigation cases (number per 1,000)

Type of measure	2019–20	2020–21	2021–22	2022–23	2023–24
Proportion of objections to new Part IVC litigation cases	117	49	88	41	28

Note: GST Performance Agreement Schedule A 7f.

GST litigation

We continue our focus on ensuring appropriate cases proceed to litigation. In 2023–24, 90% of all GST decisions handed down by the courts and tribunals were fully or partly favourable to the Commissioner, with only 10% being unfavourable.

Table 6.11 shows cases resolved prior to hearing, with cases settled increasing from 18% in 2022–23 to 25% in 2023–24. Cases conceded in whole or in part has increased to 27% in 2023–24, up from 11% last year. This can largely be attributed to taxpayers providing further evidence at the litigation stage that changes the objection decision being reviewed.

Although lower than in 2022–23, cases withdrawn by the taxpayer or dismissed by the court or tribunal make up almost 50% of all cases that do not proceed to a hearing. In these situations, the Commissioner’s objection decision is maintained.

Table 6.8: Court or tribunal litigation decision outcomes (%)

Decision outcome	2019–20	2020–21	2021–22	2022–23	2023–24
Wholly supports ATO position	85	55	67	85	60
Partially supports ATO position	0	9	11	0	30
Wholly supports taxpayer position	15	36	22	15	10

Note: GST Performance Agreement Schedule A 7g.

Table 6.9: New Part IVC litigation cases created

Case type	2019–20	2020–21	2021–22	2022–23	2023–24
First instance	60	41	47	58	62
Appeal	3	4	5	1	5
Administrative matter	0	0	0	1	0

Notes: GST Performance Agreement Schedule A 7d. Part IVC First Instance cases are where the taxpayer lodges an AAT or Federal Court application when dissatisfied with the Commissioner’s objection decision.

Table 6.10: Resolved new Part IVC litigation cases

Case type	2019–20	2020–21	2021–22	2022–23	2023–24
First instance	50	45	59	35	65
Appeal	2	5	4	2	3
Administrative matter	0	2	0	0	0

Note: GST Performance Agreement Schedule A 7e.

Table 6.11: Early resolution litigation outcomes (%)

Category	2019–20	2020–21	2021–22	2022–23	2023–24
Settled	10	49	4	18	25
Conceded (whole or in part)	57	22	13	11	27
Withdrawn by taxpayer	28	22	36	53	27
Dismissed by courts or tribunals	5	7	7	18	21

Note: GST Performance Agreement Schedule A 7h.

Strategic litigation cases which involve matters with significant revenue or compliance risk, attracted media attention or provided significant law clarification opportunities.

Table 6.12: Strategic case decisions

Matter	Issue and decision
William Lewski Family Trust v Commissioner of Taxation [2024] FCAFC 42	The Full Federal Court (FFC) unanimously dismissed the taxpayer’s appeal. It affirmed they were not entitled to claim input tax credits regarding the litigation funding agreements as the acquisitions weren’t made in carrying on their enterprise. Given this outcome, the FFC did not consider the Commissioner’s Notice of Contention regarding whether the taxpayer made creditable acquisitions as it was not necessary to dismiss their appeal.
Commissioner of Taxation v Hannover Life Re of Australasia Ltd [2024] FCAFC 23	The FFC unanimously dismissed the Commissioner’s appeal. It affirmed the Federal Court decision that the taxpayer’s methodology for calculating its entitlement to input tax credits in respect of its overhead acquisitions was fair and reasonable.
SLDL v Commissioner of Taxation [2024] AATA 912	The AAT handed down a decision in favour of the Commissioner. It concluded that the taxpayer was not entitled to reduce the ‘total amounts wagered' by the monetary value of loyalty points redeemed for the purposes of the calculation of the ‘GST global amount’. This is an alternative way of calculating a taxpayer’s net amount where they provide gambling supplies.
HNMF and Commissioner of Taxation [2023] AATA 4067	The AAT handed down a decision unfavourable to the Commissioner, in respect of which the Commissioner has lodged an appeal. This case is part of the precious metals (Gold) project and involves the anti-avoidance provisions in Division 165.
Banktech Group Pty Ltd v Commissioner of Taxation [2023] AATA 3850	A decision by the AAT favourable to the Commissioner, deciding that cash dispensing devices used by the taxpayer were not ‘ATMs’ as ordinarily understood, and as such, the taxpayer’s supplies were taxable, not input taxed. However, in making this decision, the AAT disagreed with the Commissioner’s view that ‘ATM’ has a technical or trade meaning rather than taking its ordinary meaning. No appeal was lodged.
Simplot Australia Pty Limited v Commissioner of Taxation [2023] FCA 1115	A decision by the Federal Court affirmed the Commissioner’s view that the 6 frozen food products were food of a kind marketed as a prepared meal for the purposes of item 4 of Schedule 1 to the GST Act. Therefore, the products were not GST-free. They found the attributes of a 'prepared meal' are to be discerned from common experience and the attributes of a prepared meal include examining the quantity, composition of ingredients and presentation.