Domestic Property Developments Pty Ltd as trustee for the Dals Property Trust and Commissioner of Taxation (Taxation)

This matter concerned an appeal by Domestic Property Developments Pty Ltd as trustee for the Dals Property Trust (the applicant) against a decision of the Commissioner of Taxation disallowing its objection to assessments of net amounts for the periods ending 31 March 2017 and 30 June 2017. The dispute centred on whether the applicant had passed on "excess GST" to purchasers of two residential units, Unit 1 and Unit 3. The applicant had reported GST payable on these sales, but later sought a refund on the basis that the sales were input-taxed and therefore not subject to GST.

The primary legal issues before the Tribunal were whether the two units constituted "new residential premises" for the purposes of the Goods and Services Tax Act 1999 (Cth), and if so, whether the applicant had passed on the excess GST to the respective purchasers. The applicant bore the burden of proving that the assessments were excessive, which required demonstrating that the units had only been used for making rental supplies for at least five years since the issue of their occupancy certificates and that no excess GST was passed on.

The Tribunal accepted the applicant's evidence that it had limited knowledge of GST and relied on advice from its accountants. It was advised that GST, if payable, would be calculated using the margin scheme. The applicant's directors were found to have understood that significant GST liabilities would arise on the sales, consistent with prior sales in the development. Although the applicant reported GST amounts of $96,927 for Unit 1 and $69,582 for Unit 3, it was later discovered that these sales were input-taxed. The Tribunal inferred that the applicant's directors were aware of substantial GST liabilities when pricing the units for sale or accepting offers.

The Tribunal affirmed the Commissioner's decision. It found that the applicant had not discharged its burden of proof regarding the passing on of excess GST. The applicant's submissions did not establish that the GST amounts reported were not passed on to the purchasers, and the evidence indicated that the selling prices were set in the context of an understanding that GST would be payable.