• Payments to government agencies under Division 81

    Attention

    Terms we use

    When we say:

    Not all taxes, fees or charges are exempt from GST.

    End of attention

    Introduction

    Before July 2011, Division 81 treated a tax, fee or charge as consideration for a deemed supply and the tax, fee or charge was subject to GST unless it was listed on a Treasurer’s determination as specifically exempt from GST.

    Changes to Division 81

    The law was amended with effect from 1 July 2011 to enable you to self-assess the GST treatment of taxes, fees or charges. At the same time, GST regulations were introduced to make certain fees or charges consideration for a supply and not exempt.

    The operation of Treasurer’s determination was extended until 30 June 2012 to enable you to transition into the new system.

    Additional GST regulations were introduced with effect from 1 July 2012 to make certain fees or charges either:

    • not exempt (that is, consideration for a supply)
    • exempt (that is, not consideration for a supply).

    The operation of the Treasurer’s determination was further extended for fees and charges (not taxes) until 30 June 2013.

    From 1 July 2013, PSLA 2013/2(GA)External Link provides that if a government agency classifies their fees or charges as exempt in accordance with the Treasurer’s determination, we will not change that treatment retrospectively. However, fees or charges regarded as being consideration for a supply under the not exempt GST regulations are not eligible for this treatment.

    For information about exempt and not exempt fees or charges – see:

    Operation of Division 81

    From 1 July 2011 until 30 June 2012

    Summary of the changes:

    • Taxes, fees or charges listed on the Treasurer’s determination are exempt.
    • You self-assess the taxes fees or charges that are not listed in the Treasurer’s determination under the amended Division 81 and the GST regulations that apply for the 2011–12 year.

    Operation of Division 81 from 1 July 2011 until 30 June 2012

    From 1 July 2012 until 30 June 2013

    Summary of the changes:

    Operation of Division 81 from 1 July 2012 to 30 June 2013

    From 1 July 2013

    Fees or charges are not exempt from GST if all of the following statements apply. The fees or changes:

    • are not eligible for the administrative treatment provided in PSLA 2013/2(GA)External Link
    • do not fall within the exemptions provided under the amended Division 81 and GST regulations
    • satisfy the requirements of a taxable supply.

    Summary of the changes:

    • Taxes are exempt under section 81-5.
    • You can apply the administrative treatment provided in PS LA 2013/2(GA)External Link for fees and charges listed in the Treasurer’s determination. The Treasurer’s determination ceases to apply from 1 July 2013, so fees or charges previously listed are no longer automatically exempt. However, the administrative treatment in PS LA 2013/2(GA) provides that most fees or charges listed in the Treasurer's determination will be exempt, unless it is a not exempt fee or charge under the GST regulations.
    • For fees and charges not listed on the Treasurer’s determination, self-assess the GST treatment in accordance with Division 81 and the GST regulations.

    Operation of Division 81 from 1 July 2013

    How to self-assess if GST applies to a tax, fee or charge

    The following chart will help you work out if a tax, fee or charge is exempt from GST.

    How to self-assess if GST applies to a tax, fee or charge

    Attention

    The operation of subsection 81-5(2) has not been included in the above chart.

    Subsection 81-5(2) enables a regulation to be made that would make an Australian tax subject to GST if subsection 81-5(1) applies to make the Australian tax exempt. Currently, no regulations have been made under subsection 81-5(2).

    End of attention

    Australian tax

    An Australian tax is a tax (however described) imposed under an Australian law.

    Examples of Australian taxes imposed under an Australian law include:

    • stamp duty
    • payroll tax
    • local government rates
    • various levies including industry levies.

    Australian government agency

    Each of the following is an Australian government agency:

    • the Commonwealth, a state or a territory
    • a Commonwealth, state or territory government department
    • a body (whether or not it is an entity) established by the Commonwealth, a state or a territory to carry on activities
    • a body (whether or not it is an entity) established for a public purpose by an Australian law
    • a local governing body established by a state or territory law (such as a local municipal council).

    Exempt under the GST Act

    Under subsection 81-10(4) of the GST Act, GST is not payable for government charges if they are for providing, retaining, or amending:

    • a permission, for example
      • a permit for a restaurant allowing patrons to occupy and be served on the footpath
      • a compulsory inspection fee for the retention of a permit
       
    • an exemption, for example, an exemption from
      • registration under the Australian Maritime Safety Authority Act 1990
      • payment of annual charges payable under the Therapeutic Goods (Charges) Act 1989
       
    • an authority, for example
      • an authority to place an identification plate on a road trailer
      • a petroleum special prospecting authority
      • a greenhouse gas special authority
       
    • a licence, including
      • for the practice of a profession
      • a vehicle drivers licence
      • a pilot’s licence.
       

    Under subsection 81-10(5) of the GST Act, GST is not payable for charges paid to you for providing information and for record keeping, including charges for:

    • copies of official documents
    • searches and extracts from registers
    • requests for information from you under freedom of information legislation.

    This applies unless other regulations specify a fee or charge is taxable.

    Not exempt under the GST regulations

    The following fees or charges are not exempt under the GST regulations:

    • parking in a metered parking space
    • toll for driving a motor vehicle on a road
    • hiring, using or entry to a facility, except for a national park
    • using a waste disposal facility
    • pre-lodgement advice relating to a permission, exemption, authority or licence under an Australian law that is not compulsory 
    • provision of information by an Australian government agency if it is of a non-regulatory nature
    • a supply by an Australian government agency, if the supply may also be made by a supplier that is not an Australian government agency
    • any other supply of a non-regulatory nature.

    Exempt under the GST regulations

    The following fees or charges for are exempt under the GST regulations:

    • kerbside collection of waste or the supply, exchange or removal of bins or crates used with kerbside collection of waste
    • royalties for natural resources
    • charges imposed on an industry to finance regulatory or other activities of government connected with the industry
    • compensation an Australian government agency for costs incurred in undertaking regulatory activities
    • charges imposed by a court, tribunal, commission of inquiry or Sheriff’s office
    • a supply of a regulatory nature made by an Australian government agency
    • entry to a national park.

    In addition, until 1 July 2013, fees and charges listed in the Treasurer's determination are exempt. The determination ceases to apply from 1 July 2013. From 1 July 2013, under the administrative treatment in PSLA 2013/2(GA)External Link, most fees and charges listed in the Treasurer's determination can be treated as exempt.

    Fees or charges covered by both an exempt regulation and a non-exempt regulation

    GST regulations contain tie-breaker rules for situations when a fee or charge is covered by both an exempt and a not exempt regulation. These rules determine whether the exempt or not exempt regulation would apply in specific circumstances depending on the type of fee or charge.

    If paragraph 81-10.01(1)(g) and any of the paragraphs in subregulation 81-15.01(1) apply, the fee or charge is exempt. If any of the other paragraphs of subregulation 81-10.01(1) and any of the paragraphs in subregulation 81-15.01(1) apply, the fee or charge is not exempt.

    See the diagram How to self-assess if GST applies to a tax, fee or charge which demonstrates the tie-breaker rules.

    If you make an error

    If you have made an error with the GST treatment of a particular tax, fee or charge, you can correct GST errors on your current activity statement if you meet the time and debit error value limits. If you can't make the correction on your current activity statement you either have to revise the original activity statement or write to us. For tax periods starting on or after 1 July 2012, revising your activity statement or writing to us will be treated as an application to amend an assessment.

    If an amount of GST has been overpaid, you may need to meet other conditions, such as refunding your clients the GST component included in the tax, fee or charge before you are entitled to a refund of overpaid GST.

    Questions and answers

    1. Is a tax, fee or charge imposed under an Australian law and paid through an authorised payment agent (such as Australia Post) paid to you?

    Yes.

    A tax, fee or charge must be ‘imposed under an Australian law’ and ‘payable to an Australian government agency’.

    If a tax, fee or charge is paid to an authorised payment agent under an arrangement between the Australian government agency and the agent for the collection of those charges, the tax, fee or charge is ‘paid to’ the Australian government agency by the applicant.

    The tax, fee or charge is a debt payable to the Australian government agency and not the authorised payment agent.

    2. Is a regulation made under a State or Territory Government Act an Australian law?

    Yes.

    A regulation is a law made by a person or body with the authority of parliament.

    3. Does a fee or charge captured under the grandfathering arrangements need to be apportioned if it applies to an extended period of time after 1 July 2013?

    No.

    Until 1 July 2013, any fee or charge listed in the Treasurer's determination is exempt from GST.

    If the Australian government agency imposes a fee or charge before 1 July 2013 that relates partly or fully to a period after 30 June 2013 (for example, a 10 year term driver licence), the Treasurer's determination applies to the whole of the fee or charge. There is no requirement to apportion the fee or charge over the 10 year term.

    4. Is a fee or charge listed in the Treasurer's determination exempt from GST under the grandfathering arrangements if it is imposed before 1 July 2013 but is not payable until after 1 July 2013?

    Yes.

    The grandfathering arrangements provide that the changes to Division 81 do not apply to a payment of a fee or charge listed in the Treasurer's determination if it is imposed before 1 July 2013. It is the date that the fee or charge is imposed that determines whether the grandfathering arrangements apply. A fee or charge is imposed when the payer's liability for the fee or charge arises, rather than when the fee or charge is paid or payable.

    5. Is a fee or charge listed in the Treasurer's determination exempt from GST under the grandfathering arrangements if the description is correct but the reference is to an old version of the Australian law?

    Yes.

    A reference in the Treasurer's determination to a particular provision of a State or Territory law that has been repealed and re-enacted is taken to be a reference to the corresponding provision of the re-enacted State or Territory law.

    6. Is a fee or charge exempt when it is listed on the Treasurer's determination?

    Yes, until 30 June 2013 under the grandfathering arrangements in the law and the GST regulations. From 1 July 2013, most fees or charges listed on the Treasurer’s determination can be treated as exempt if PSLA 2013/2(GA)External Link applies.

    7. What is the treatment of a fee or charge that is regulatory?

    The non-commercial activities of government agencies are outside the scope of GST. The term regulatory captures those supplies made by a government agency if that agency is legislatively empowered to make the relevant supply and the supply is to satisfy a regulatory purpose.

    Examples of fees or charges that have a regulatory character include:

    • a charge for providing a copy of a birth, death or marriage certificate
    • a compulsory inspection fee for checking that the foundations of a building comply with a building code
    • a fee for reviewing a film to give it an appropriate audience rating before it can be exhibited at a public cinema
    • a fee for land registry services such as titling, valuation or surveying undertaken by a government agency in providing those services
    • a fee for towing and impounding a vehicle, if a traffic offence has been committed
    • a fee for impounding animals
    • a fee for releasing seized abandoned shopping trolleys.

    8. Do you have to review all your fees or charges after 1 July 2013?

    Yes. However, many fees and charges can be treated as exempt if PSLA 2013/2(GA)External Link applies.

    More information

    Last modified: 11 Mar 2014QC 24540