Is it legal to tax a tax?

[Deleted member 29185]

Can any legal eagle type AFFers out there tell me if it's legal to tax a tax?

Looking at the figure below, of a flight CBR - OOL on VA, it would seem the GST is charged on everything including other taxes. I was of the impression the Gov't could not tax a tax.

Any opinions?

Fares View $ 96.45

• $ 96.45 Adult

Taxes Hide $ 38.55

• $ 16.68 Tax.QRC (QRC)
• $ 5.85 Tax.QRO (QRO)
• $ 3.75 Safety and Security Charge Australia (WG1)
• $ 12.27 AU GST (UO2)

Fees

Travel Extras

Seats

[h=4]Total:[/h]$ 135.00

 

[medhead]

It is for GST on insurance stamp duty. Reasoning being that commonwealth had the view that states would remove the stamp duties. Whereas the agreement was to review stamp duty.

Wouldn't be surprised if it is legal in this case. (Basically don't believe the words pollies say, no tax on a tax was Howard's commitment.) Certainly the security charge would be related to provision of a service and hence taxable. Probably the same for the passenger movement charge.

 

[Andyzx]

Legal yes, despicable yes, warranted probably. :evil:
The GST Act 1999 /2000 and subsequent amendments have clarified that where a service is performed like QRC, QRO, Safety and Security Charge Australia (WG1) even if that service is not provided to you directly, GST is applicable and charged.

Another example is Council rates these are a tax on property owners but GST is charged as services are provided.
If they did not charge GST, then the cost would be approx. 4-8% higher anyway to account for the GST inputs they have to pay. so you end up paying for it anyway and of course if you are GST registered you get it back saving money..

Internationally (terminals) this is interesting as the service is provided in Oz but the past migration is not Oz territory! so security etc should not have GST included on the part after migration. Just like Duty Free

 

[Pushka]

We have a commercial lease for our business and we pay all the landlords outgoings. He charges us GST on items on top of the GST in the original invoices.

 

[harvyk]

I think the bigger issue should be the airlines happiness to charge "tax" on things which are really just part of providing the service.

 

[burmans]

I think the bigger issue should be the airlines happiness to charge "tax" on things which are really just part of providing the service.

Well of course as we all know (or should know) these aren't actually taxes despite the attempt by airlines to portray them that way and hence the question of whether its a tax on a tax is actually moot.

 

[nlagalle]

Internationally (terminals) this is interesting as the service is provided in Oz but the past migration is not Oz territory! so security etc should not have GST included on the part after migration. Just like Duty Free

depends where you leave from.. in MEL security is before immigration!

 

[Deleted member 29185]

Well of course as we all know (or should know) these aren't actually taxes despite the attempt by airlines to portray them that way and hence the question of whether its a tax on a tax is actually moot.

Eh? Aren't they federal taxes?

Otherwise it brings up another issue. I also thought it was illegal for companies to tax and fine. Isn't that in the domain of Gov't only?

 

[harvyk]

Eh? Aren't they federal taxes?

Otherwise it brings up another issue. I also thought it was illegal for companies to tax and fine. Isn't that in the domain of Gov't only?

What you have is a very big "sort of". AFAIK companies which are not registered loan providers (who can legally charge interest) are not allowed to have penalties beyond recovering actually incurred charges. So for instance when your mobile provider charges you a $15 late fee, they legally are not really meant to, and it's part of the reason why they will drop such charges at the drop of the hat.

You are also not allowed to do component pricing without displaying the full price at the end. For example you can't say $50 flights plus taxes, you need to say $80 as the total price and that includes $30 in taxes.
You can however call each component of the product what ever you want, provided you don't represent something as a gov't charge when it's not.

 

[Sethor]

We have a commercial lease for our business and we pay all the landlords outgoings. He charges us GST on items on top of the GST in the original invoices.

Only end user of the product or service should pay GST. ie if my business buys something for $110 inc GST & on sells it for $220 inc GST, $20 goes to the taxman & $10 from previous transation is tax deductable.

 

[nickykim]

One of the areas I have expertise in - there is no GST on Council rates unless you are receiving an additional service like a second garbage bin. So no tax on rates, I believe because they are a statutory charge calculated on ability to pay not payment for direct service received.

 

[oz_mark]

Eh? Aren't they federal taxes?

Otherwise it brings up another issue. I also thought it was illegal for companies to tax and fine. Isn't that in the domain of Gov't only?

The QR taxes are likely Head Taxes. These are certainly subject to GST: http://www.ato.gov.au/businesses/PrintFriendly.aspx?ms=businesses&doc=/content/47523.htm

$16.68 is CBR (although it looks like an old rate to me)
$5.85 is OOL

 

[medhead]

Only end user of the product or service should pay GST. ie if my business buys something for $110 inc GST & on sells it for $220 inc GST, $20 goes to the taxman & $10 from previous transation is tax deductable.

That's basically the idea. Just the GST is claimed as an input tax credit, IIRC. So Pushka should be claiming the GST paid back on the original invoices. Unless I've got that the wrong way around and the landlord is paying for the services and then invoicing the tenant. In which case the landlord is doing something very wrong.


All of which raises question for me, Are the airlines charging us "taxes" ex GST? Or are they passing on the taxes inclusive of GST?

 

[BoyZeus]

We have a commercial lease for our business and we pay all the landlords outgoings. He charges us GST on items on top of the GST in the original invoices.

Pushka do you know that you can avoid this by paying the outgoings yourself? My landlords agent would add GST to the original invoices when billing me for rent. Legally you can ask for the invoice and pay the rates, water etc directly with service provider. PM if you want further info.

Sorry I know this is off topic but I'd love to be able to save a fellow AFFer a few bucks!

 

[medhead]

Pushka do you know that you can avoid this by paying the outgoings yourself? My landlords agent would add GST to the original invoices when billing me for rent. Legally you can ask for the invoice and pay the rates, water etc directly with service provider. PM if you want further info.

Sorry I know this is off topic but I'd love to be able to save a fellow AFFer a few bucks!

That has to be illegal. :?: If they are collecting GST, they must be registered for GST. So they should be doing the whole input tax credit BAS thing, shouldn't they?

 

[nlagalle]

That has to be illegal. :?: If they are collecting GST, they must be registered for GST. So they should be doing the whole input tax credit BAS thing, shouldn't they?

they couldn't send you a bill and add GST to it as i'm pretty sure it has GST in it already. The only extra they could charge is a service fees (with GST on that). but I am pretty sure the a $55 bill inc gst couldn't be on-charged as $60.50 inc GST from the landlord. Mind you it has been so long since i did GST with my business.

 

[knasty]

That has to be illegal. :?: If they are collecting GST, they must be registered for GST. So they should be doing the whole input tax credit BAS thing, shouldn't they?

They should be, but there's nothing illegal if they don't deduct the value of the input tax credits available to them from their onward supply. It's a matter of contract - a decent contract will normally only allow for expense reimbursement claims net of input tax credits available to the supplier.

As far as I'm aware GST is the only true tax that you pay on airfares. The rest are charges, levies etc but not actually a tax. You pay GST on fines...

 

[medhead]

Yeah. Ok. Just I thought the GST legislation prohibited double charging GST. Hence the ITC system.

 

[kevrosmith]

The QR taxes are likely Head Taxes. These are certainly subject to GST: http://www.ato.gov.au/businesses/PrintFriendly.aspx?ms=businesses&doc=/content/47523.htm

$16.68 is CBR (although it looks like an old rate to me)
$5.85 is OOL

Agree with oz_mark here. These are the pax charges which the Airport Operators charge the airlines per pax. The airlines simply pass the charge onto the passenger.