Court Decisions
GST: enterprise carried on
24.04.2009
The Federal Court (McKerracher J) has dismissed an appeal by the Commissioner from a decision of the AAT in which it was held that the taxpayer company’s activities in collecting valuable artwork and antiques was an enterprise for the purposes of GST (FCT v Swansea Services Pty Ltd [2009] FCA 402.
Over several years the taxpayer company accumulated a valuable collection of artwork and antiques which it treated as “creditable acquisitions” for the purposes of GST and, therefore, claimed input tax credits. The Commissioner cancelled the taxpayer company’s GST registration on the basis that it was not carrying on an enterprise but, rather, was simply a vehicle for carrying out the hobby of its sole director or, alternatively, was simply accumulating assets as an investment, but without disposing of them. Compared with the value and number of acquisitions over the years, the value and number of sales were very small.
The AAT expressly concluded that the purpose of the taxpayer company acquiring the assets was to eventually sell them at a profit.
McKerracher J held that it was open for the AAT to take into account the entirety of the transactional history together with explanations regarding that history, its context and statements (both contemporaneously with the events in question and in the hearing) as to the corporate objective. The AAT was not bound by rules of evidence. In any event, the conclusion that it reached was open to it with or without the subjective evidence of purpose. As there was a reasonable basis for the factual finding reached, and no other error was demonstrated, the conclusion of the AAT should not be disturbed. The argument that the finding could not possibly be open on the evidence (that is, that there was no evidence at all to support the finding) could not be accepted.
