Qantas told to pay the taxman

Qantas will have to pay the Australian tax office AUD34 million in goods and services tax (GST) it collected from passengers who booked tickets but then didn’t turn up for their flights.

In a landmark ruling today, the court determined Qantas had still provided a service to those customers and therefore owed the Australian Tax Office (ATO) the outstanding GST.

The tax office claimed Qantas and its budget subsidiary Jetstar owed AUD26.6 million in GST collected on unused tickets, and that Qantas owed another AUD7.6 million on fares for which no refunds were ever claimed.

Qantas said that as it never actually provided the flights to those particular passengers, it did not owe the tax.

AAP said the case could have implications for other businesses that charge GST on non-refundable tickets, such as tour companies and other transport operators.

The High Court ruled by majority that Qantas made a ”taxable supply” whenever it received a booking.

”Flights were sold and bookings taken on the basis that Qantas would use its best endeavours to carry the passenger and baggage,” the judgment says.

”Consequently, even if the passenger did not actually travel, there was a taxable supply incurring GST liability.

”That meant Qantas had to hand over the tax passengers paid."