Australia: Entities paying notional GST have rights of appeal in federal courts (Federal Court decision)

The Federal Court held that it had jurisdiction to hear disputes in respect of notional goods and services tax (GST).

Rights of appeal in federal courts (Federal Court decision)

The Federal Court held that it had jurisdiction to hear disputes in respect of notional goods and services tax (GST) paid by federal, state and territory government entities. As a result, entities paying notional GST have the same rights of appeal in the courts against the Commissioner’s decisions as other taxpayers.

The case is: Landcom v. Commissioner of Taxation (2022) FCA 510


Section 114 of the Constitution prohibits the imposition of any tax (including GST) on property of any kind owned by a state (including property owned by local councils). Nonetheless, at the time of the implementation of GST, each state agreed to contribute voluntarily to the federal government the amount of the GST that would have been payable if the state were bound by the GST law in relation to its property (“notional GST”). Subsequently, local governments were also required to pay notional GST in order to gain access to local government financial assistance.

The Australian Taxation Office (ATO) has previously asserted the view that notional GST disputes were to be resolved through internal ATO review, in-house facilitation/mediation, conciliation or external review. 


The taxpayer, a state-owned corporation, is the New South Wales (NSW) government’s land and property development vehicle. In 2020, the ATO issued the taxpayer an unfavorable private ruling relating to GST. The taxpayer objected, the ATO disallowed the objection, and the taxpayer appealed to the Federal Court.

The ATO argued that the Federal Court did not have jurisdiction to hear the appeal because the dispute related to notional GST payable and that the ruling was merely a courtesy to provide guidance to the taxpayer that did not have the status of a private ruling. The court found that it did have jurisdiction to hear the taxpayer’s appeal in respect of notional GST payable because:

  • The voluntary inclusion by the taxpayer of notional GST in a GST return will result in an assessment which gives rise to a debt to the ATO, enforceable by the ATO
  • Regardless of whether there can be an assessment of notional GST, a taxpayer dissatisfied with an objection decision has a substantive right to seek relief from the court

KPMG observation

Although the ATO has appealed to the Full Federal Court the substantive issue addressed in the private ruling, the ATO has accepted the decision that the court has jurisdiction to hear appeals in respect of notional GST.

For more information, contact a KPMG tax professional in Australia:

Jacqui Hardwick |

Langdon Patrick |

Christina Mathias |


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