In short:

The $240 million in Commonwealth funds for the Macquarie Point stadium and precinct will now be exempt from GST calculations, leaving more money to the state.

The state Liberal government, federal Labor members and independent senator Tammy Tyrrell have all said they secured the much sought-after backflip.

What's next?

The exemption means the funding will not negatively affect Tasmania's GST share, which is the state's largest source of income.

The federal government has decided its $240 million in contributions to Hobart's Macquarie Point stadium and precinct will be exempt from GST calculations after all.

The decision ends a months-long war of words between the state and federal governments and means the federal money will be additional funding for the state rather than it negatively impacting the state's GST share.

Federal Treasurer Jim Chalmers had earlier said the project would not be granted an exemption. 

Today, multiple parties claimed credit for the outcome.

Tasmanian Treasurer Guy Barnett said the state government "took the fight to Canberra and successfully secured the $240 million GST exemption".

"We have advocated long and hard to the federal Labor government to secure this outcome, and we are pleased that they have finally done what's right" he said. 

"I received a letter from the Treasurer Jim Chalmers very early this morning … we're very pleased, I welcome the news, this has been a long hard-fought campaign of advocacy for Tasmania to get its fair share," he added. 

Meanwhile, Tasmanian members of the federal Labor government also claimed credit, saying in a statement: "We are pleased to have secured an exemption to the Commonwealth's funding for the Macquarie Point Urban Renewal Project from GST calculations".

Independent senator for Tasmania Tammy Tyrrell also said she had secured the exemption during her own negotiations.

"State Labor whined, State Liberals pouted, federal MPs and senators tut-tutted how dreadful it all was but it took an independent Senator to get it done," she said.

She said she found out about the decision in the final sitting of federal parliament, last month, well before the state government.

Liberal senator Jonathon Duniam also chipped in: "Finally, Tasmania gets what we deserve."

He said he had long advocated for the change and took aim at what he said was federal Labor treating Tasmania "as a second-class state".

"The federal and state Liberals have led the charge to get this exemption," he said in a statement.

"It is a relief that federal Labor have reversed their decision to rip $240 million out of Tasmania's share of the GST.

"Tasmania deserved this funding from the start."

Mr Barnett said it was a win for all who advocated for it.

"It's a team Tasmania approach because I notice today so many others taking credit for this federal Labor government backflip. That's fine" he said.

"And isn't it interesting, we have a federal election on the way, I wonder if that has anything to do with this backflip by federal Labor."

The state Labor opposition has welcomed the federal government's decision and also pointed to their role in securing the outcome.

In a statement, Labor spokesperson Josh Willie said it was "very rich of Treasurer Guy Barnett to claim credit given the Liberals didn't know anything about today's announcement".

"It's important to remember that it wasn't until Labor asked about the stadium GST in Question Time last year that the Rockliff government sought an exemption," he said.

GST question was likely to be federal election issue

Prime Minister Anthony Albanese promised the $240 million funding for the Hobart precinct's redevelopment — which includes but is not specific to the stadium — in April last year.

It was seen as the final funding needed to the ensure the stadium would go ahead, and therefore a Tasmanian AFL team.

The next month, on May 9, state Labor began asking then-state treasurer Michael Ferguson if he had requested the funds be exempt from GST calculations.  

Mr Ferguson wrote to to the federal treasurer that same day to formally request what he said they had discussed earlier.

What followed was a series of suggestions from the Prime Minister and Treasury that the funding would not be granted an exemption.

On May 23, the federal treasurer responded to a renewed request from the state government, explaining why it would not be exempt.

"Granting an exemption for the Macquarie Point precinct funding would be inconsistent with decisions taken previously, including the $100 million Commonwealth contribution to the North Queensland Stadium in Townsville, which was not exempted," Dr Chalmers wrote.

At the time, Mr Ferguson said the "gloves were off", and promised to get the federal opposition leader, Peter Dutton involved, potentially making it an federal election issue.

GST is Tasmania's largest single source of revenue, contributing more than 40 per cent to the state's income in 2021-22.

GST exemptions not common

Providing projects with a GST exemption is relatively rare.

None were given in 2022-23, while last financial year the Tarraleah hydro power station received an exemption.

For 2024-25, GST exemptions have so far been given to on-country learning in the Northern Territory, payments under the Social Housing Accelerator program and for Brisbane Olympic and Paralympic infrastructure.

In 2015, then-infrastructure minister Anthony Albanese exempted funding for the Macquarie Point site's remediation from GST calculations.