Travelex Ltd v Federal Commissioner of Taxation

The High Court of Australia considered whether a supply of foreign currency by Travelex Ltd on the departures side of the customs barrier at Sydney International Airport was GST-free. Travelex Ltd appealed a decision of the Full Court of the Federal Court of Australia, which had overturned a declaration by Emmett J that the supply was GST-free. The core of the dispute concerned the interpretation of section 38-190(1) of the *A New Tax System (Goods and Services Tax) Act 1999* (Cth) and whether the transaction fell within its provisions for GST-free supplies.

The legal issues before the High Court were whether the sale of Fijian dollars by Travelex Ltd constituted a supply of or in relation to rights, and if so, whether those rights were for use outside Australia, thereby rendering the supply GST-free under item 4(a) of the table in section 38-190(1) of the GST Act. The Court had to determine the legal nature of the bank notes sold, specifically whether they represented rights that could be considered a "supply in relation to rights" for the purposes of the GST Act, and whether the transaction was a "financial supply" as defined.

The High Court reasoned that the sale of foreign currency bank notes, in the context of being acquired for use outside Australia by a traveller departing the country, constituted a supply of or in relation to rights. The Court viewed the bank notes not merely as goods, but as representing a chose in action – a right to demand payment from the issuer – and a right to be used as legal tender. Given that these rights were acquired by a traveller for use outside Australia, the Court found that the supply met the criteria for being GST-free under item 4(a) of section 38-190(1).

The High Court allowed Travelex Ltd's appeal with costs. It set aside the orders of the Full Court and reinstated the declaration made by Emmett J, which declared that the sale of Fijian dollars was a supply of or in relation to rights and a GST-free supply by reason of item 4(a) of the table in section 38-190(1) of the GST Act. The Commissioner of Taxation was ordered to pay Travelex Ltd's costs.