Qantas Airways says it is disappointed by the High Court’s refusal to allow it to claim back $34 million in GST payments on tickets that were never used.
However the airline says the judgment, delivered today, will have no financial impact on its balance sheet as it has already paid the $34 million to the tax office.
The High Court said the GST component on tickets Qantas sold for flights that were never taken, and where fares were not refunded to customers, had to be paid to the tax office.
The court determined Qantas had still provided a service to those customers and therefore owed the Australian Tax Office the outstanding GST.
The tax office claimed Qantas and its budget subsidiary Jetstar owed $26.6 million in GST collected on unused tickets, and that the flying kangaroo owed another $7.6 million on fares for which no refunds were ever claimed.
Qantas had argued that as it never actually provided the flights to those particular passengers, it did not owe the tax.
"Qantas is disappointed with the High Court’s decision,” the airline said today.
"The decision will have no financial impact on the Qantas Group because the relevant GST has already been paid to the tax office."
In its judgment, the High Court said Qantas sold the flights on the basis that the airline would use its best endeavours to carry the passengers and their luggage.
"Consequently, even if the passenger did not actually travel, there was a taxable supply incurring GST liability,” the court said.
Qantas took legal action in a bid to have the tax office return the $34 million the airline had paid on tickets that customers never used.
It argued that because the flights were not taken, there was no taxable supply made.
After failing to resolve its dispute with the Australian Tax Office, Qantas took the matter to the Administrative Appeals Tribunal, which supported the Australian Taxation Office.
Qantas appealed, and the Federal Court of Australia came down on Qantas’s side.
The tax office then sought leave to have the matter heard by the High Court.
Qantas shares were three cents higher at $1.22 at 10.08am.