Abstract:
This article examines the application of GST to “involuntary
supplies”. It does this by analysing the compulsory acquisition of land and
the compulsory acquisition of securities. It is clear that the compulsory
acquisition of land under statutory mechanisms generally should not
involve taxable supplies as the dispossessed landholder is passive in the
process. This highlights a key limitation of the concept of a “supply”. The
Commissioner recently has acknowledged this treatment despite expressing
a contrary view for more than two years. The GST treatment of the
compulsory acquisition of securities is more uncertain. These uncertainties
largely arise from whether the limitations of the concept of “supply” also
apply in relation to the definition of “financial supply” in the A New Tax
System (Goods and Services Tax) Regulations 1999.
