Qantas has lost a landmark High Court case concerning the Goods and Services Tax (GST) on non-refundable fares. The airline had argued it was entitled to keep $34 million in GST collected from customers who did not show up for flights, but the court ruled against it.
The case centered on whether Qantas needed to remit GST for fares that were forfeited by passengers. The airline claimed that since the flight supply was not fully provided, GST should not be payable. However, the High Court determined that GST is still owed to the Australian Tax Office because the customer was charged the tax.
Senior tax counsel Robert Jeremenko explained that the dispute dates back to 2005. Qantas had been withholding the GST on no-show fares, arguing that the supply was incomplete. The court's decision means the airline must now pay the $34 million to the commissioner of taxation.
Had Qantas won, it could have set a precedent for other industries, such as sporting and concert events, where non-refundable tickets are common. Companies might have retained GST windfalls from forfeited payments, rather than passing the money to government coffers.
In a statement, Qantas expressed disappointment but noted that the money had already been paid to the Tax Department, so there will be no impact on its bottom line. The ruling clarifies that GST on non-refundable fares must go to the government, not the supplier.
