GIO provides 2,800 GST refunds on car leases

24 August 2000

"Consumers who entered into car lease agreements prior to 1 July 2000 and have been levied a Goods and Services Tax on their lease payments may, in limited circumstances, be eligible for a refund of the GST paid", Australian Competition and Consumer Commission Chairman, Professor Allan Fels, said today.

"GIO Finance, a major provider of finance for car lease agreements, has advised the ACCC that, as a result of a ruling from the Australian Tax Office, it will refund approximately 2, 800 customers the GST collected on lease payments.

"After receiving several consumer queries about the charging of GST by GIO on leases entered into prior to and spanning 1 July 2000, the ACCC raised its concerns with GIO.

"Following discussions with GIO it became apparent that there had been differing legal opinion as to the implications of the New Tax System on that industry, particularly in relation to what constitutes a review opportunity. In response to the confusion, GIO sought an ATO ruling in relation to a number of its car lease contracts and whether they would attract a GST. Based on this ruling, GIO decided to refund the GST charged to 2,800 consumers.

"GIO responded quickly once it had obtained the ATO's advice and is in the process of refunding customers. GIO was already in the process of undertaking a review of all contracts in which GST may have been incorrectly charged and has subsequently offered full refunds to these consumers. As a result of these reviews GIO is applying refunds to 2,800 current leases.

"GIO is to be congratulated for its pro-active approach in seeking the ATO's advice on whether GST was payable under its car leases and for quickly taking steps to refund customers on the basis of the ATO advice.

"Businesses like GIO which act positively and effectively to address such issues have nothing to fear from the ACCC. Failing such a response, the ACCC will not hesitate to take whatever action is necessary to ensure that consumers obtain immediate refunds.

"The ACCC is of the view that there may be other providers of finance for car lease agreements which may have incorrectly levied a GST on lease =agreements entered into prior to 1 July 2000. Whilst the ACCC is investigating a number of these providers, it is also calling on the entire car finance industry to immediately review their contracts to ensure that any GST which may have been charged incorrectly is refunded immediately.

"If providers of finance for car lease agreements have not obtained a ruling from the ATO regarding these leases, the ACCC would encourage them to take immediate steps to do so. Also consumers with concerns over the application of GST to their car leases should at the first instance discuss the matter with the relevant provider.

"If concerns cannot be addressed through this mechanism, consumers are should call the ACCC on the GST Price Line on 1300 302 502 if they believe they have been incorrectly charged GST on lease agreements entered into prior to 1 July2000".

Release number: 
MR 231/00
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