In late July 2011, Sportsbet Pty Ltd (Sportsbet) and
International All Sports Limited (IAS) obtained Federal Court
orders setting aside Notices of Assessment issued by the Australian
Commissioner of Taxation.1
Online wagering, totalisator and lottery operators with overseas
customers have the potential to seek substantial refunds for GST
overpayments on the same basis.
At issue was whether, when determining the GST liability of an
Australian gambling business, prize monies paid to overseas-based
customers of that operator were to be included in the calculation
of "total monetary prizes" paid out by that operator. The
Commissioner's view was these amounts were not to be
This issue arose as GST was payable only in relation to the net
amount collected by the operator (which was calculated after
deducting the total winnings paid to customers from the total
amount received in wagers). It was agreed that amounts to be
excluded from the total amount received were wagers received from
overseas customers (as they were treated as GST free supplies).
The Federal Court determined that prize monies paid to overseas
customers should be included in the "total monetary
prizes" calculation. His Honour Justice Jessup determined that
there was no justification for the Court to depart from
"...the ordinary meaning conveyed by the text of the
definition of 'total monetary prizes'".2
"Total monetary prizes" means the total of all prizes,
whether or not they related to GST-free supplies. Therefore,
Sportsbet and IAS were entitled to have their net amount reassessed
and to a refund of any overpayment of the net amount.
The decision (which is not being appealed by the Commissioner)
will result in not only both IAS and Sportsbet receiving
significant multimillion dollar refunds, but also other online
wagering, tote and lottery operators being entitled to claim
refunds on the same basis. In this regard, we note that Centrebet
has announced, in the context of its acquisition by Sportingbet,
that the Commissioner has indicated that he does not propose to
argue the issues which are the basis of Centrebet's proceedings
to recover a $90.7 million GST refund on a similar basis.
It is probable that other parties will seek refund claims on a
similar basis. However, we note that this exclusion is no longer
available in respect of future wagering activity.
1 Ibid. at 52.
2International All Sports Limited v
Commissioner of Taxation & Sportsbet Pty Ltd v
Commissioner of Taxation  FCA 824 (26 July 2011)
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