FEDERAL COURT OF AUSTRALIA Central Equity Limited v Commissioner of Taxation [2011] FCA 908 Citation: Central Equity Limited v Commissioner of Taxation [2011] FCA 908 Parties: CENTRAL EQUITY LIMITED and SOUTHPARK DEVELOPMENTS PTY LTD v COMMISSIONER OF TAXATION File number: VID 1165 of 2010 Judge: GORDON J Date of judgment: 10 August 2011 Catchwords: TAXATION – GST – taxable supply – sale of real property – contract executed prior to 1 July 2000 – settlement occurred after 1 July 2000 – A New Tax System (Goods and Services Tax Transition) Act 1999 (Cth), ss 6(3) and 7(1) – when property "made available" Legislation: A New Tax System (Goods and Services Tax) Act 1999 (Cth) A New Tax System (Goods and Services Tax Transition) Act 1999 (Cth) Income Tax Assessment Act 1936 (Cth) Taxation Administration Act 1953 (Cth) Tax Laws Amendment (2008 Measures No 3) Act 2008 (Cth) Cases cited: Aurora Developments Pty Ltd v Commissioner of Taxation [2011] FCA 232 Brady King Pty Ltd v Commissioner of Taxation (2008) 168 FCR 558 Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370 Federal Commissioner of Taxation v Prestige Motors Pty Ltd (1994) 181 CLR 1 Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342 Qantas Airways Limited v Commissioner of Taxation [2010] AATA 997 Spencer v The Commonwealth (2010) 241 CLR 118 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 Woodhams; Revlon Manufacturing Ltd v Commissioner of Taxation (1995) 63 FCR 535 Date of hearing: 1 August 2011 Date of last submissions: 2 August 2011 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 81 Counsel for the Applicants: Ms J Batrouney SC with Mr C Sievers Solicitor for the Applicants: PricewaterhouseCoopers Counsel for the Respondent: Mr M Moshinsky SC with Ms C Button Solicitor for the Respondent: Legal Services Branch – Australian Taxation Office IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1165 of 2010 BETWEEN: CENTRAL EQUITY LIMITED First Applicant SOUTHPARK DEVELOPMENTS PTY LTD Second Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: GORDON J DATE OF ORDER: 10 AUGUST 2011 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. By 4:00pm on 17 August 2011, the parties bring in orders to give effect to these reasons for decision. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1165 of 2010 BETWEEN: CENTRAL EQUITY LIMITED First Applicant SOUTHPARK DEVELOPMENTS PTY LTD Second Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: GORDON J DATE: 10 AUGUST 2011 PLACE: MELBOURNE REASONS FOR JUDGMENT INTRODUCTION 1 This case concerns an application for declaratory relief in respect of the operation of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act) and the A New Tax System (Goods and Services Tax Transition) Act 1999 (Cth) (the GST Transition Act). 2 The first applicant, Central Equity Limited (CEL), is a residential property developer that specialises in land subdivision and the development of strata-titled multi-level apartment buildings. CEL does not buy and develop the land in its own name. Rather, CEL sets up a specific purpose entity to own and develop the land. The second applicant, Southpark Developments Pty Ltd (Southpark), is a specific purpose entity and a wholly owned subsidiary of CEL. Southpark is a developer of three high rise developments – "The Metro", "The Capri" and "The Vista". 3 Since 1 July 2000, CEL has been registered for goods and services tax (GST) and has been the representative member of a GST group within the meaning of Div 48 of the GST Act (CEL GST Group). Also since that date, Southpark has been registered for GST and has been a member of the CEL GST Group. 4 Southpark agreed to sell strata-titled apartments "off the plan" to purchasers. The contracts were signed before 1 July 2000 but did not settle until after 1 July 2000. Also after 1 July 2000, the plans of subdivision creating the titles were registered and the titles were issued. 5 The GST Transition Act states that GST is only payable on a supply to the extent that it is made on or after 1 July 2000 and that a supply of real property is made when the property is "made available" to the purchaser: s 6(3). 6 The principal issue may be simply stated – did Southpark make a "taxable supply" of real property on or after 1 July 2000 in circumstances where it entered into an enforceable contract of sale of real estate before 1 July 2000 but settlement of that contract occurred after 1 July 2000? If the answer to that question is "no", it is then necessary to determine whether the notification CEL lodged of its entitlement to a GST refund was effective for the purposes of s 105-55 of Sch 1 to the Taxation Administration Act 1953 (Cth) (the TAA) and item 16(2) of Sch 2 of the Tax Laws Amendment (2008 Measures No 3) Act 2008 (Cth) (the TLAA). 7 For the reasons that follow, Southpark did make a "taxable supply" of real property on or after 1 July 2000. However, if Southpark did not make a "supply" of real property on or after 1 July 2000 (a view I reject), then I consider CEL's notification was effective for the purposes of s 105-55 of Sch 1 to the TAA and item 16(2) of Sch 2 of the TLAA. 8 These reasons for decision summarise the facts relevant to the high rise developments and then address the legislative framework. What then follows is the analysis of each issue. FACTS 9 On 27 July 1999, Southpark became the sole registered proprietor of a parcel of land located in South Melbourne, Victoria, contained in Certificates of Title Volume 10447 Folios 314 and 315 (the South Melbourne Land). The South Melbourne Land was purchased with the intention of developing residential strata-titled units on the land and selling those units to the public. The developments were to be known as "The Metro", "The Capri" and "The Vista". It was common ground that the Court was not required to consider "The Vista". It may therefore be put to one side. The Metro development 10 In about October 1999, CEL commenced marketing and selling apartments in "The Metro". 11 By a contract of sale dated 13 November 1999, Southpark sold to Srinath Raja Paul De Silva Wijeyeratne and Fatima Charmaine Sweenitha De Silva Wijeyeratne and / or nominee (the Metro Purchasers) the portion of the South Melbourne Land described as Lot 81 on the proposed Plan of Subdivision No PS431955F (Lot 81) for $295,000 (the Metro Contract). At this stage, construction of "The Metro" had not yet commenced, the Plan of Subdivision had not been registered and no building contract had been signed. The Metro Contract is representative of all the contracts entered into by Southpark in relation to "The Metro". 12 On 13 November 1999, the Metro Purchasers paid $5,000 of the $29,500 deposit then due, and on or about 1 December 1999, paid the balance of the deposit. 13 On about 21 December 1999, a design and construction contract for "The Metro" was executed. Construction commenced in about January 2000. As at 1 July 2000, construction of "The Metro" was approximately 23% complete. 14 On 15 February 2001, Plan of Subdivision No PS431955F was registered and new certificates of title were issued for each lot on the plan of subdivision. Lot 81 was issued as Certificate of Title Volume 10567 Folio 972. 15 On about 10 April 2001, the Metro Purchasers paid the balance of the purchase price due under the Metro Contract and settlement occurred. In respect of the Metro Contract, CEL applied the margin scheme under Div 75 of the GST Act to calculate the GST payable. 16 On about 8 June 2001, CEL, as representative member of the CEL GST Group, paid $12,022.73 to the respondent, being the GST liability calculated by CEL to be payable in respect of the Metro Contract. The Capri development 17 In about February 2000, CEL commenced marketing and selling apartments in "The Capri". 18 By a contract of sale dated 12 May 2000, Southpark sold to Leung Wai Yip and Ho Wai Man Lilian (the Capri Purchasers) the portion of the South Melbourne Land described as Lot 1008 on the proposed Plan of Subdivision No PS437418B (Lot 1008) for the purchase price of $246,000 (the Capri Contract). At this stage, construction of "The Capri" had not yet commenced, the Plan of Subdivision had not been registered, no building contract had been signed and Southpark did not have the necessary building permits required in order to proceed with the development. The Capri Contract is representative of all the contracts entered into by Southpark in relation to "The Capri". 19 On about 12 May 2000, the Capri Purchasers paid $5,000 of the $24,600 deposit due, and on about 16 May 2000, paid the balance of the deposit. 20 On 27 July 2000, a design and construction contract for "The Capri" was executed. Construction commenced in about August 2000. 21 On 19 July 2001, Plan of Subdivision No PS437418B was registered and new certificates of title were issued for each lot on the plan of subdivision. Lot 1008 was issued as Certificate of Title Volume 10592 Folio 195. 22 On about 11 October 2001, the Capri Purchasers paid the balance of the purchase price due under the Capri Contract and settlement occurred. In respect of the Capri Contract, CEL applied the margin scheme under Div 75 of the GST Act to calculate the GST payable. 23 On about 22 November 2001, CEL, as representative member of the CEL GST Group, paid $17,363.64 to the respondent, being the GST liability calculated by CEL to be payable in respect of the Capri Contract. Terms of the Metro Contract and Capri Contract 24 The Metro Contract contained detailed terms governing settlement of the sale of Lot 81 and the circumstances in which that sale would or might not proceed. The Metro Contract was conditional upon registration of the Plan of Subdivision, and contained a number of other conditions precedent and subsequent, any of which may have prevented the sale being completed. The Capri Contract contained equivalent terms. By way of example, under the Metro Contract: 1. the Vendor carried the risk of loss or damage to the Property and the Chattels until settlement and was required to "deliver" the Property to the Purchaser at the Settlement Date: General Conditions, cl 2.1 and 2.2; 2. "Property" was defined to mean "the land together with any improvements known as LOT 81, "THE METRO AT CENTRAL GARDENS" …": Particulars of Sale, "Property"; 3. the "Land" was the land "described in the attached Plan(s) and being LOT 81 on proposed Plan of Subdivision No. PS431955F ... being part of the land comprised in Certificate of Title Volume 10447 Folios 314 & 315" (emphasis added): Particulars of Sale, "Land"; 4. the "Settlement Date" was the "date upon which vacant possession of the Property and Chattels must be provided, namely, upon acceptance of title and payment of the full Purchase Price": Particulars of Sale, "Settlement Date"; 5. the Property and any Chattels did "not pass to the Purchaser until full payment [was] made of the Purchase Price": Special Conditions, cl 14; 6. the "Price" was defined as $295,000, with a deposit of $5,000 payable on signing and the balance of the 10% deposit payable by 26 November 1999: Particulars of Sale, "Price"; 7. the balance of the Price was payable on the later of 14 days after the Vendor's written notification of the registration of the Plan of Subdivision by the Registrar of Titles and 14 days after the Vendor's written notification of the issue of an Occupancy Permit for the Property, but "in no case shall the Purchaser be obliged to settle before the 1st day of December 2000": Particulars of Sale, "Payment of Balance"; 8. where the "Property" was a lot on an unregistered plan of subdivision (which was the case), the deposit was not to exceed 10% of the Price and was to be held either "on trust for the purchaser" (emphasis added) by the Vendor's solicitor or estate agent or in a special bank account specified by the Vendor in the joint names of the Purchaser and the Vendor: General Conditions, cl 6.3. In fact, monies were held on trust by the Vendor's solicitors; 9. the deposit would not be released to the Vendor until the later of the registration of the "Plan [of Subdivision]" or the issue of an Occupancy Permit, and imposed a further condition of release of the deposit, being satisfaction or capacity to satisfy any mortgages at Settlement: Special Conditions, cl 5.2; 10. the Vendor was entitled to "elect to avoid and cancel" the contract within 180 days if it formed the view that it could not proceed with the development for "commercial, practical, planning or any other reason whatsoever": Special Conditions, cl 2.4(a); 11. either party was entitled to "rescind" the contract if the Plan of Subdivision was not registered within 36 months: Special Conditions, cl 6.2; 12. the Vendor was permitted to make any amendments or alterations to the Plan of Subdivision required to obtain its sealing or registration without the Purchaser having the right, among others, to rescind or determine the contract (other than where amendments materially affected the Property): Special Conditions, cl 6.3; 13. the Purchaser was prevented from in any way dealing with the Property "or the Purchaser's rights or interest in or under this Contract" prior to settlement: Special Conditions, cl 6.4; 14. the contract was "subject to and conditional upon" the Vendor entering into a Domestic Building Contract with the Builder prior to the Settlement Date: Special Conditions, cl 11.1(b); 15. the contract was "subject to and conditional upon the execution and completion" by the Builder of all the Works on or before the Settlement Date: Special Conditions, cl 11.2; and 16. provision of answers to the requisitions was deferred until after the Plan of Subdivision was registered: Special Conditions, cl 21.2. Lodgment of GST refund notification 25 On 30 June 2008, CEL lodged with the respondent a form entitled "Notification of entitlement to a GST refund" (the Notification). The Notification stated that CEL had mistakenly paid GST in relation to the supply of real property where the contract was entered into prior to 1 July 2000. 26 On 11 November 2008, the respondent acknowledged receipt of the Notification and advised that it would accept the Notification if the refund claim was lodged promptly. 27 On 27 November 2008, CEL informed the respondent that the GST refund claim had been quantified at approximately $6,514,712 arising from the tax periods between 1 July 2000 and 31 August 2002. This refund claim included GST payments made by CEL in respect of contracts entered into by Southpark in relation to "The Metro", "The Capri" and "The Vista", where the contracts were entered into prior to 1 July 2000 but settled after that date. 28 On 23 June 2009, the respondent informed CEL that it had reviewed the Notification and formed the view that it did not constitute a notification for the purposes of s 105-55 of Sch 1 to the TAA and item 16(2) of Sch 2 to the TLAA. LEGISLATIVE FRAMEWORK 29 The GST Act commenced on 1 July 2000: s 1-2(1). Under the GST Act, GST is payable on a "taxable supply": s 7-1(1). The term "taxable supply" is defined in s 9-5 of the GST Act as follows: You make a taxable supply if – (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with Australia; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. An asterisk indicates there is a definition of the expression in the dictionary in the GST Act. The applicants accept that paras (b), (c) and (d) are satisfied and that no part of the taxable supply would be GST-free or input taxed. The issue in dispute is whether para (a) applies, that is, whether Southpark made a supply for consideration on or after 1 July 2000. 30 "Supply" is defined in s 9-10 of the GST Act as follows: (1) A supply is any form of supply whatsoever. (2) Without limiting subsection (1), supply includes any of these: (a) a supply of goods; (b) a supply of services; (c) a provision of advice or information; (d) a grant, assignment or surrender of *real property; (e) a creation, grant, transfer, assignment or surrender of any right; (f) a *financial supply; (g) an entry into, or release from, an obligation: (i) to do anything; or (ii) to refrain from an act; or (iii) to tolerate an act or situation; (h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g). (Emphasis added.) 31 "Real property" is defined in s 195-1 of the GST Act in wide terms: Brady King Pty Ltd v Commissioner of Taxation (2008) 168 FCR 558 at [11]. Section 195-1 states that "real property" includes: (a) any interest in or right over land; or (b) a personal right to call for or be granted any interest in or right over land; or (c) a licence to occupy land or any other contractual right exercisable over or in relation to land. 32 Section 9-15(1) of the GST Act defines "consideration" to include "any payment, or any act of forbearance, in connection with a supply of anything" and "any payment, or any act of forbearance, in response to or for the inducement of a supply of anything". Moreover, it does not matter whether the payment, act or forbearance was voluntary, or whether it was by the recipient of the supply: s 9-15(2) of the GST Act. 33 Finally, reference should be made to the definition of "GST" in s 195-1 of the GST Act as "tax that is payable under the *GST law …". The phrase "GST law" is defined in s 195-1 of the GST Act as: (a) this Act; and (b) any Act that imposes GST; and (c) the [GST Transition Act]; and … 34 While the GST Act commenced on 1 July 2000, it does not contain any transitional timing rules or a general time of supply rule. The GST Act is concerned with attribution – the tax periods to which a person's taxable supplies are attributable: see Div 29 of the GST Act. So, for example, in relation to accruals accounting, s 29-5(1) of the GST Act provides that: The GST payable by you on a *taxable supply is attributable to: (a) the tax period in which any of the *consideration is received for the supply; or (b) if, before any consideration is received, an *invoice is issued relating to the supply – the tax period in which the invoice is issued. 35 If, however, you account on a cash basis, s 29-5(2) of the GST Act provides: (a) if, in a tax period, all of the *consideration is received for a *taxable supply – GST on the supply is attributable to that tax period; or (b) if, in a tax period, part of the consideration is received – GST on the supply is attributable to that tax period, but only to the extent that the consideration is received in that tax period; or (c) if, in a tax period, none of the consideration is received – none of the GST on the supply is attributable to that tax period. 36 Division 99 of the GST Act contains an overriding qualification to s 29-5 in relation to deposits as security. It provides that: 99-1 GST does not apply to the taking of a deposit as security for the performance of an obligation (unless the deposit is forfeited or is applied as consideration). GST is not attributable prior to forfeiture. 99-5 (1) A deposit held as security for the performance of an obligation is not treated as *consideration for a supply, unless the deposit: (a) is forfeited because of a failure to perform the obligation; or (b) is applied as all or part of the consideration for a supply. (2) This section has effect despite section 9-15 (which is about consideration). 99-10 (1) The GST payable by you on a *taxable supply for which the *consideration is a deposit that was held as security for the performance of an obligation is attributable to the tax period during which the deposit: (a) is forfeited because of a failure to perform the obligation; or (b) is applied as all or part of the consideration for a supply. (2) This section has effect despite section 29-5 (which is about attributing GST for taxable supplies). Again, these sections are dealing with attribution, not the time of supply. 37 What was to happen though if transactions straddled 1 July 2000? That issue was addressed by the GST Transition Act. 38 First, in contrast to the GST Act, the GST Transition Act determines whether the GST regime applies by reference to the time of supply. Section 7(1) of the GST Transition Act provides that "GST is only payable on a supply or importation to the extent that it is made on or after 1 July 2000" (emphasis added). 39 Next, s 6 of the GST Transition Act sets out the test for determining when a supply or acquisition had been made: (1) This section sets out how to determine when a supply or acquisition is made for the purposes of this Act. Note: Many of the rules in this Act rely on this concept. (2) A supply or acquisition of goods is made: (a) when the goods are removed; or (b) if the goods are not to be removed – when the goods are made available to the recipient; or (c) if the goods are removed before it is certain that a supply will be made (for example, if the goods are given or taken on approval, sale or return, or similar terms) – when it becomes certain that a supply has been made. (3) A supply or acquisition of real property is made when the property is made available to the recipient. (4) A supply or acquisition of services is made when the services are performed. Note: However, section 12 provides a different rule for progressive and periodic contracts. (5) A supply or acquisition of any other thing is made when the thing is performed or done. … (Emphasis added.) 40 It will be necessary to return to consider the GST Law (including ss 6 and 7 of the GST Transition Act) in further detail later in these reasons. Issue 1 – did Southpark make a "taxable supply" of real property on or after 1 July 2000? Parties' submissions 41 The applicants submitted that: 1. No "taxable supply" was "made" by Southpark because the "supply" of real property was "made" at the time of entry into the contract, which was prior to the commencement of the GST Act. 2. That primary contention being correct, there is no need to resort to the GST Transition Act because the supply of real property was made before 1 July 2000. 3. If, however, the primary contention is not accepted, the Court has to resort to ss 7(1) and 6(3) of the GST Transition Act and to the alternate contention that the real property was "made available" to the purchasers at the time of entry into the contract, which was prior to 1 July 2000. 42 The respondent rejected those contentions. He submitted that: 1. Determination of the time of supply is not to be considered separately under s 9-5 of the GST Act and s 6(3) of the GST Transition Act. The GST Transition Act cannot be relegated in the manner contended by the applicants. So, where the factual circumstances giving rise to a supply occur both before and after 1 July 2000, the GST Transition Act operates to determine whether or not the transaction falls to be taxed under the GST regime. Accordingly, the primary question is whether the real property was "made available" for the purposes of s 6(3) of the GST Transition Act before or after 1 July 2000. 2. In that context, the "supply" was "made" upon settlement because that was when the property was "made available" for the purposes of s 6(3) of the GST Transition Act. 3. Alternatively, the property was "made available" at settlement (rather than the time of contract) because the Plans of Subdivision had not been registered and the titles had not been created at the time of the contract. Put another way, the property could not have been "made available" at a time when the title did not exist. Analysis 43 The principal question is an exercise in statutory construction. Resolution of that question must begin in the text of the statutes: Spencer v The Commonwealth (2010) 241 CLR 118 at [50] and the authorities there cited. 44 First, the question whether GST is payable in respect of a supply requires reference to the "GST Law" as a whole. As noted earlier (see [33] above), that includes both the GST Act and the GST Transition Act. It is the combined effect of those Acts (among others) which determines liability to pay GST. The express words of ss 4, 6(1), 7 and 10 of the GST Transition Act are consistent with that construction. By way of example, s 10 of the GST Transition Act provides: If, before 1 July 2000: (a) any consideration is received in connection with a supply, or provided in connection with an acquisition, that you will make on or after that day; or (b) an invoice is issued relating to a supply or acquisition that you will make on or after that day; for the purposes of determining the tax period to which the GST or input tax credits are attributable, the consideration is taken to have been received or provided, or invoice taken to have been issued, during your first tax period after that day. … The concepts of "supply", "acquisition", "consideration", "tax period" and the like are all concepts defined in the GST Act and apply to the GST Transition Act: s 5(2) of the GST Transition Act. 45 As noted earlier, s 7(1) of the GST Transition Act limits the scope of the GST Act to supplies which occurred on or after 1 July 2000. As to whether a supply falls within s 7(1), one must consider s 6 of the GST Transition Act, which sets out how to determine when a supply is made for the purposes of s 7(1): see also the Explanatory Memorandum to the GST Transition Act which relevantly states at [2.7] that s 6 will "provide the basis for a general rule to determine whether supplies that span implementation will fall under the GST system". 46 For those reasons, I accept the respondent's contention that determination of the time of supply is not to be considered separately under s 9-5 of the GST Act and s 6(3) of the GST Transition Act: see [42] above. The temporal limitation in s 7(1) of the GST Transition Act is essentially a threshold question – did the supply occur on or after 1 July 2000? If yes, then the GST Act applies and one must consider whether a "supply" was made for the purposes of s 9-5 of the GST Act. If no, then the GST Act, specifically s 9-5, has no application. As to when a supply occurred for the purposes of s 7(1), that is to be determined in accordance with s 6 of the GST Transition Act. 47 Before turning to consider s 6 of the GST Transition Act, a number of matters should be noted. 48 First, in respect of a sale of real property, there may be more than one event which gives rise to a "supply" within the meaning of s 9-10 of the GST Act. However, both parties agree that there can only be one "taxable" supply for the purposes of s 9-5 of the GST Act. As the High Court stated in Federal Commissioner of Taxation of the Commonwealth of Australia v Reliance Carpet Co Pty Limited (2008) 236 CLR 342 at [5]: The composite expression "a taxable supply" is of critical importance for the creation of liability to GST. In the facts and circumstances of a given case there may be disclosed consecutive acts each of which answers the statutory description of "supply", but upon examination it many appear that there is no more than one "taxable supply". 49 Thus, the ultimate issue is whether the taxable supply was made before or after 1 July 2000. The applicants submitted the supply took place upon entry into the Metro or Capri Contracts, and that settlement was merely ancillary or a step in "perfecting" the rights and obligations that arose upon entry into the contracts of sale. According to the applicants it was that supply (the entry into the contracts) which would underpin the finding of a taxable supply for the purposes of s 9-5(a) of the GST Act and because it was made by Southpark before 1 July 2000, s 9-5(a) of the GST Act is not satisfied. The respondent submitted that a supply took place upon settlement of those contracts, and that any earlier acquisition of rights that might otherwise constitute a supply in its own right was merely ancillary to the real and substantive provision of that which was contracted for at settlement. It is apparent that both events would satisfy the s 9-10 definition of "supply": see [30] above, in particular subs (2)(d) and (2)(e). 50 Secondly, if the Metro and Capri Contracts had been entered into after 1 July 2000, then by reason of s 99-5(1)(b) of the GST Act, the deposit held as security for completion of the contract would not have been "treated as *consideration for [that] supply, unless the deposit [was] applied as all or part of the consideration for a supply". In other words, s 99-5 would have attributed the GST to the later tax period. In essence, s 99-5 takes the deposit out of the definition of "consideration" until a later point when the deposit is forfeited or applied as all or part of the consideration for a supply (for example, settlement): see also s 99-10 at [36] above. Thus, it attributes the "taxable" supply to settlement, because at that time there is a supply for consideration for the purposes of s 9-5 of the GST Act. Here, there is a complicating factor – the deposit was paid prior to 1 July 2000, meaning s 99-5 does not apply to the deposit. 51 Thirdly, as the previous case law on the GST Act makes clear, each case must be determined on its own facts: see for example, Reliance Carpet at [5]. It is difficult, and I suggest dangerous, to seek to espouse some general rule on the way in which transactions which straddle 1 July 2000 are to be dealt with. So, for example, I do not accept the respondent's submission that the expression "made available" means placing something at the disposal of another, and that where there is a sale of real property, the real property is "made available" at settlement rather than at the time of contract. There may well be circumstances in which that proposition does not hold true. 52 Fourthly, transactions in the form of the Metro and Capri Contracts fall for determination under subs (3) of s 6 of the GST Transition Act, as they satisfy the broad definition of "real property" in s 195-1 of the GST Act: see [31] above. In relation to "real property", s 6(3) provides that a supply of real property is made when the property is "made available" to the recipient: see [39] above. 53 The term "made available" is not defined in the GST Transition Act. There is no direct authority on what constitutes real property being "made available" in the context of the GST Transition Act. It is common ground that the phrase should be given its ordinary meaning, although the parties did not agree on its ordinary meaning or the time at which the relevant supply was in fact made. Resort to dictionary definitions of the word "available" or cases which have considered the phrase in an entirely different statutory context are of limited, if any, assistance. As the applicants submitted, the Court should adopt a statutory construction of the GST Act which "gives it a practical and fair business operation" and one which accords with "social and economic reality": Brady King at [24] and [30]. 54 Considering s 6(3) in the context of s 6 of the GST Transition Act as a whole, it is clear that, for the purposes of determining the time of supply under the GST Transition Act, the time of substantive performance, being the time at which the recipient obtains that which was bargained for, is the time of supply. Under s 6(4), a supply of services is made when the services are "performed" as opposed to when the contract for the future performance of services is signed. Under s 6(5), a supply of "any other thing" is made when the thing is "performed or done" as opposed to when the contract for the future acquisition of the thing is executed. The phrase "made available" should be construed in a manner that is consistent with the statutory scheme by which performance or tangible provision of that which was bargained for is the time of supply. 55 The task in the present case is to analyse the Metro and Capri Contracts and determine when the real property was "made available" to the purchasers: see [24] above for a summary of some of the important terms of the Metro Contract (the Capri Contract contained equivalent terms). In addition to those terms, the applicants pointed to other features of the Metro Contract (which are equally applicable to the Capri Contract) to support their contention that the supply was at the time of contract: 1. the Metro Contract was a binding contract giving rise to enforceable rights and obligations; 2. the Metro Contract was executory and if the sale did not complete because of one of the conditions precedent or subsequent, the rights and obligations created on contract were not rescinded ab initio; 3. a number of the clauses (for example, cll 2.1, 2.2, Particulars of Sale, "Settlement Date" and "Price") were standard terms in all real estate contracts whether "off the plan" contracts or contracts for lots on existing plans of subdivision; 4. the definition of "Property" in the Special Conditions (see [24.2] above) was simply descriptive of what has been sold under the contract recognising that the real property sold under the contract formed part of an existing and larger piece of property; 5. Southpark was unable to sell the real property to any other party; and 6. the purchaser was the sole beneficiary of any increase in value of the property. 56 The applicants also relied upon two other aspects of the contracts – (1) that the purchaser had a caveatable interest and an insurable interest; and (2) that Special Condition 17 gave the purchaser the right to deal with the contractual interest. These last two submissions require closer analysis. By cl 6.4 of the Special Conditions, the purchaser agreed not to encumber or in any way deal with the Property or the purchaser's rights or interest in or under the contract of sale until after settlement. The purchaser could not deal with the "Property". It had contracted not to encumber the Property or its interest in that Property whether by a caveat or otherwise. At best, the purchaser had a nominee clause: Special Condition, cl 17. 57 Both parties referred to Brady King Pty Ltd v Commissioner of Taxation (2008) 168 FCR 558. That case concerned the issue of whether a taxpayer "held or acquired" a "freehold interest" in real property as at 1 July 2000 for the purposes of the provisions of the margin scheme in Div 75 of the GST Act. In that case, the relevant contract was entered into by the taxpayer prior to 1 July 2000 but the contract did not settle until after 1 July 2000. Following settlement, the taxpayer subdivided the land into stratum units and sold those units. 58 The Court stated (at [27]) that: The Commissioner argued that the stratum units which the appellant sold were not "derived" from the equitable estate it held as purchaser, rather they were derived from the fee simple estate it obtained on completion of the purchase and registration (although senior counsel for the Commissioner disavowed any argument that what was acquired or held was the registered interest). But that fee simple was not conferred on the appellant by the Lands Title Office without regard to anything the appellant had previously done to acquire it. The appellant was only able to complete the purchase and obtain registration because, by entering into the contract it had obtained or acquired enforceable rights against (and of course obligations to) the previous owner of the property. The contract was the genesis or source of the appellant's interest in the stratum unit it supplied. In the language of the Commissioner's submissions, the contract was the parent. (Emphasis added.) Accordingly, the Court held that when the purchaser entered into the contract (prior to 1 July 2000), it acquired or held something that was an inextricable part of the interest which it sold after 1 July 2000: Brady King at [38]. That is not surprising. 59 The applicants submitted that at the time that the "enforceable rights" described in Brady King above were acquired by the purchaser, those rights were granted and "made available" to the purchaser. In relation to the Metro and Capri Contracts, the respective purchasers acquired rights enforceable by specific performance necessary for the completion of the contract: Brady King at [28]; Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. At this time, the purchasers also acquired various other rights and accepted various obligations under the contract (see [24] and [53] above), were the beneficiaries of any increase in the value of the land, and bore the corresponding risk of any reduction in value. While the purchasers did not acquire possession upon execution of the Metro and Capri Contracts, the applicants submitted that the term "made available" cannot depend solely on the giving of possession. In support of that proposition, the applicants submitted that because various interests in land were encompassed within the definition of "real property" (such as a reversionary or remainder interest), "made available" cannot be limited to physical use or access. 60 The applicants placed considerable emphasis on the decision of the High Court in Reliance Carpet summarised by the Full Court of Federal Court in Brady King at [35]-[37] as follows: [35] In Reliance Carpet 82 ALJR 968; 246 ALR 448 a vendor of real property rescinded a contract of sale (in the sense of termination for breach by the purchaser; see the High Court's comments at [2]) and forfeited the deposit. The High Court held that GST was payable by the vendor on the deposit because the vendor had made a "taxable supply", that is a "supply for consideration". [36] The High Court at [12]-[13] accepted the following argument of the Commissioner: • The contractual promise of the vendor to convey the subject land on the completion of the contract was "supply" because it was a "grant" (s 9-10(2)(d)) of "real property", that is to say "any interest in or right over land" or "a personal right to call for or be granted any interest in or right over land" or "any other contractual right exercisable over or in relation to land" (Dictionary, s 195-1); • The deposit received by the vendor was a payment "in connection with" that "supply" and so was "consideration" (s 9-15(1)(a)); • By reason of the special provision of s 99-5 (part of Div 99 dealing with deposits as security), the deposit was treated as consideration only if and when the deposit was forfeited; it was a "wait and see" provision (see [35], [42]). [37] Their Honours noted at [13] that: the identity of the subject matter of the contract, in accordance with ordinary principles of conveyancing, (w)as the title or estate of the vendor in a parcel of land rather than merely the parcel itself in a geographical sense. 61 The applicants also referred to Qantas Airways Limited v Commissioner of Taxation [2010] AATA 997. In that case, the Administrative Appeals Tribunal considered the question of whether GST was payable by an airline in circumstances where a passenger pays for airline travel but consequently cancels the booking or does not turn up for the flight and does not receive a refund. The Tribunal stated that it was acting consistently with the approach of the High Court in Reliance Carpet (at [15]) and held that GST was payable by the airline because the airline made a supply when it entered into an enforceable contract with the passenger, which created legally enforceable rights and obligations. The Tribunal stated at [9]: The correct view of the Conditions of Carriage seems to us to be that they give rise to a contract enforceable at law between Qantas and each passenger. The contract, in turn, creates rights (s 9-10(2)(e)) and involves entering into obligations "to do anything" (s 9-10(2)(g)). There is, accordingly, an argument that at the time of the creation of the rights and the entering into of the obligations, which will generally be at the time, or shortly after, a reservation is made, there is a supply. Certainly it will be no later than the time of payment. The mutual promises or the payment will provide consideration. An appeal was heard by the Full Federal Court on 24 May 2011. The judgment is reserved. 62 In my view, neither Reliance Carpet nor Qantas support the applicants' proposition that the real property was "made available" to the purchasers upon Southpark's entry into the Metro Contract or Capri Contract. 63 First, Reliance Carpet concerned Div 99 of the GST Act, which effectively provides that a deposit is not treated as consideration for a supply unless it is forfeited or applied as all or part of the consideration: s 99-5. In that context, the High Court stated at [42] that: … upon the proper construction of the Act no question of two "taxable supplies" arises in that situation. The deposit is not treated as consideration for a supply (and therefore there is no taxable supply) unless, in the case of a sale that proceeds from contract to completion, it is applied (as normally it is on completion) as all or (more usually) part of the purchase price. If and when it happens that the deposit is applied as part (or all) of the consideration for the transfer of the land then the GST is attributable to the tax period during which that occurs, and there is only one taxable supply. 64 Division 99 of the GST Act provides a mechanism whereby a deposit is, in effect, held in abeyance pending determination of whether the transaction is proceeding (in which case the deposit becomes part of the consideration for the single supply upon completion) or whether the deposit is forfeited (in which case the deposit becomes the consideration for the single supply occurring when the contract was entered into). Reliance Carpet highlights that s 99-5 is essentially a "wait and see" provision (see [36] above), and that only where a deposit is forfeited will the "single supply" be deemed to have occurred when the contract was entered into. Given that the Metro and Capri Contracts proceeded to completion, Reliance Carpet does not assist the applicants' case. 65 Secondly, while Reliance Carpet and Qantas both recognise that entry into a contract may result in the acquisition of rights so as to give rise to a "supply" within the meaning of the GST Act, these cases concerned incomplete transactions in which the terms of those transactions were an essential element in the resolution of the issues to be determined. In such cases, the early supply stood by itself and, consistent with Reliance Carpet and Qantas Airways, could be a supply giving rise to an obligation to remit GST. On the findings by the Court and the Tribunal, there was no other economically substantive supply to which the early supply (in the form of rights) was a precursor. 66 In the present case, Brady King is also of limited assistance. It was not concerned with s 6(3) of the GST Transition Act (or s 9-5 of the GST Act). It concerned the application of the margin scheme under s 75-10 of the GST Act. In that context, it held that it was not necessary that there be a strict juridical identity between the strata-title units sold after 1 July 2000 and the nature of the interest held by the supplier before 1 July 2000. The Full Court held that it was sufficient that the pre-1 July 2000 contract was the "genesis or source" of the interest in strata units subsequently supplied, and that the purchaser in that case had an "interest" in the parent property which was recognised by law. Nothing in the Full Court's judgment addresses the question of the time at which real property is supplied for the purposes of s 6(3) of the GST Transition Act (or s 9-5 of the GST Act). 67 Furthermore, the limited utility of Brady King in determining the timing of supply in other cases was recently noted in Aurora Developments Pty Ltd v Commissioner of Taxation [2011] FCA 232, which concerned the supply of a going concern provisions in s 38-325 of the GST Act. In that case the issue was whether the "day of the supply" was the day the contract was entered into or the date the contract settled. Greenwood J stated that the decision in Brady King was of no assistance in determining the construction of s 38-325(2) and the date of supply for the purposes of that section. (Greenwood J had regard to the contract in determining the timing of supply and found that "under the contract, settlement was treated by the parties as the day of supply by which time the seller's works would have been completed; indefeasible title obtained; and, other seller's obligations discharged.") 68 In the present case, as at 1 July 2000, the purchasers under the Metro and Capri Contracts had not in any sense obtained any real or practical ability to use the strata interests in apartments they contracted to acquire, and thus the relevant property had not been "made available" to them: see [52] and [53] above. Rather, the property was "made available" to the purchasers at settlement, which was after 1 July 2000. 69 Accordingly, the Metro and Capri Contracts fell within the temporal limitation in s 7(1) of the GST Transition Act and enlivened the GST Act. As the supplies (which occurred at settlement) under the Metro and Capri Contracts were for consideration (comprised of the deposits and balances paid at settlement), they constituted "taxable supplies" under s 9-5 of the GST Act and attracted GST. 70 Of course, this outcome is not unsurprising or unfair. It remains open to the applicants to seek to apply (as they in fact did) the margin scheme under s 75-10 of the GST Act. Issue 2 – the Validity of the Notification 71 The conclusion reached above means that the applicants had no entitlement to a GST refund. It is therefore strictly unnecessary for me to consider the validity of the Notification under s 105-55 of Sch 1 to the TAA and item 16(2) of Sch 2 to the TLAA. However, for the sake of completeness, it is appropriate that I summarise the views I have formed. 72 On 30 June 2008, CEL lodged the Notification: see [25] above. At item 3, the Notification stated that the tax periods covered by the GST refund claim were from 1 July 2000 to 31 May 2008. At item 4, CEL described the circumstances of the refund as follows: The entity noted above has mistakenly paid GST in error in relation to the supply of real property transactions where the contract was entered into prior to 1 July 2000, and has overpaid GST on supplies made where the GST was calculated under the margin scheme as the acquisition price was used rather than a 1 July 2000 valuation. The entity is currently in the process of quantifying the amount by which it has overstated its net amount and will notify the ATO of the precise amount of the GST refund it will be seeking in due course. 73 The issue is whether the Notification satisfied the statutory criterion that CEL had "notified the Respondent in writing … that [it was] entitled to the refund" by 20 June 2008: item 16(2) of Sch 2 to the TLAA. 74 Item 16(2) provided: The amendments made to section 105-55 of Schedule 1 to the [TAA] by this Schedule apply in relation to a refund, other payment or credit: (a) that is of a kind referred to in subsection 105-55(1) or (3) of Schedule 1 to that Act as amended by this Schedule; and (b) to which you became entitled before the commencement of this Schedule; unless, before that commencement, you notified the Commissioner in writing, or the Commissioner notified you in writing, that you were entitled to the refund, other payment or credit. 75 A number of matters were not in dispute. First, the purpose behind item 16(2) was to correct an anomaly whereby a taxpayer who was in a tax positive position (being an excess of GST over input tax credits) did not face a four year time limit for refund applications from overpaid GST, being the time limit which applied where a taxpayer was in a negative position. Secondly, the legislation did not provide for a specific form of notification. Thirdly, if the Notification was not valid, CEL was outside the four year limitation period to make a claim for GST overpaid in respect of the Metro and Capri Contracts. 76 Was the Notification effective? In my view, the answer is yes. Item 16(2) required the Respondent to be notified of an entitlement to "the refund, other payment or credit". The respondent made no complaint about the fact that the GST refund claim was quantified after 30 June 2008. Instead, he submitted that the Notification did not provide "sufficient specific facts about the circumstances under which the entitlement" arose. He submitted that the lack of specificity arose from the following five matters: 1. First, the time period covers the entire span of the completed tax periods since the GST was introduced on 1 July 2000 through to 31 May 2008. 2. Secondly, the notice does not describe with any specificity the nature or number of contracts in question or the developments to which they relate. 3. Thirdly, the notice does not specify that the entitlement arises from supplies having been made under those contracts before 1 July 2000, taking them outside the GST regime. 4. Fourthly, the notice is internally inconsistent because it suggests both that GST was mistakenly paid and that the margin scheme was misapplied. If both parts of the first paragraph of the notice were referring to contracts signed before 1 July 2000 but which settled thereafter, the notice is internally inconsistent because the margin scheme does not apply if the supplies were made before 1 July 2000. The very terms of the notice show that it was a speculative or ambit claim on what could only have been alternate bases. The notice did not constitute notification of any clearly identified overpayment of GST. 5. Fifthly, by referring simply to "real property transactions", the notice was unclear. That expression could refer to sales of land, leases or any number of other transactions related to land. 77 I accept that the Notification must fulfil its purpose and convey the information which it is intended to convey: cf Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370 at [33]. In the present case, the Notification achieved its objectives. It identified the period of the claim. The fact that the claim spanned eight years does not detract from the fact that the time period was specified. Next, although the legislation did not provide for a specific form of notification, the form used stated that details of the refund claim including "the specific nature of the refund" and "the circumstances under which the refund arise" were to be provided. Item 4 of the Notification (see [72] above) contained that information. The specificity sought by the respondent (see [76] above) was unnecessary. Moreover, the third of the respondent's complaints is wrong. The Notification did specify that the entitlement arose from supplies having been made under real property contracts before 1 July 2000. If that assertion was correct, then it was at least arguable that it took them outside the GST regime: see [38] above. Finally, the fact that CEL had alternate, albeit inconsistent, claims was the fact. That both were made does not detract from the fact that the Notification identified both claims. 78 The respondent referred to a number of authorities in support of the proposition that further specificity was necessary: Woodhams; Revlon Manufacturing Ltd v Commissioner of Taxation (1995) 63 FCR 535 and Federal Commissioner of Taxation v Prestige Motors Pty Ltd (1994) 181 CLR 1 at 14. None of these cases dealt with the question of the content necessary for a valid notification. Each dealt with a different statutory regime. Indeed, Woodhams was concerned with the validity of "director penalty notices" issued by the respondent under ss 222AOE and 222APE of the Income Tax Assessment Act 1936 (Cth). The differences in statutory context are self evident. 79 In the present case, the absence of the information identified by the respondent did not involve a failure to provide necessary details if, without such information, the Notification would not fulfil its purpose (cf Woodhams at [33]) and, moreover, the Notification did not fail to meet a requirement made essential by s 105-55 of Sch 1 to the TAA and item 16(2) of Sch 2 to the TLAA: cf Woodhams at [40]. 80 For those reasons, the Notification under s 105-55 of Sch 1 to the TAA and item 16(2) of Sch 2 to the TLAA was valid. ORDERS 81 I will direct the parties to bring in orders to give effect to these reasons for decision by 4:00pm on 17 August 2011. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. Associate: Dated: 10 August 2011