Commissioner of Taxation v Unit Trend Services Pty Ltd

The Commissioner of Taxation appealed to the High Court of Australia against a decision of the Full Court of the Federal Court of Australia concerning the application of the margin scheme for Goods and Services Tax (GST) and the general anti-avoidance provisions of the *A New Tax System (Goods and Services Tax) Act 1999* (Cth). The dispute arose from Unit Trend Services Pty Ltd, the representative member of a GST group, applying the margin scheme to the sale of units in a property development.

The High Court was required to determine whether section 165-5(1) of the GST Act was engaged, specifically whether a GST benefit obtained by Unit Trend was "not attributable to" the making by Unit Trend of a choice, election, application, or agreement expressly provided for by the GST law. This involved considering whether the transactions constituted a "scheme" and whether Unit Trend obtained a "GST benefit" within the meaning of the anti-avoidance provisions.

The High Court allowed the appeal, finding that the GST benefit obtained by Unit Trend was attributable to choices and elections expressly provided for by the GST law, such as the application of the margin scheme and the sale of a going concern. The Court reasoned that while a scheme existed and a GST benefit was obtained, the critical element for the anti-avoidance provision to apply was that the benefit must not be attributable to a choice or election permitted by the GST legislation. The Court concluded that the benefit arose from the structure of the transactions and the choices made within the framework of the GST law, rather than from an artificial arrangement designed to circumvent the law.

Consequently, the High Court set aside the orders of the Full Court of the Federal Court. The matter of the remission of penalty was remitted to the Administrative Appeals Tribunal for further consideration. Unit Trend Services Pty Ltd was ordered to pay the Commissioner's costs of the appeal and cross-appeal in the Full Court, as well as the costs of the High Court appeal.