ATO Interpretative Decision
ATO ID 2001/113
Goods and Services Tax
GST and Lease of a fishing quotaFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, the holder of an 'individual transferable quota' in a fishery, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it leases its quota to another entity?
Decision
Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it leases its 'individual transferable quota' to another entity.
Facts
Certain species of fish are protected by a quota system. In order to fish for these protected species, it is a requirement to hold an 'individual transferable quota' (ITQ).
The entity is the holder of a number of ITQ's which it leases out to other entities. The entity is registered for goods and services tax (GST). The transaction meets the other positive requirements of section 9-5 of the GST Act.
Reasons For Decision
An entity makes a taxable supply where the requirements of 9-5 of the GST Act are satisfied. An essential element of a taxable supply is the making of a supply by an entity.
The term 'supply' is broadly defined in subsection 9-10(1) of the GST Act as 'any form of supply whatsoever'. Paragraph 9-10(2)(e) of the GST Act further states that a 'supply' includes a creation, grant, transfer, assignment or surrender of any right.
An ITQ consists of a bundle of rights which are transferable. The lease of these rights are therefore a supply within the specific meaning of the term under paragraph 9-10(2)(e) of the GST Act.
Accordingly, the entity makes a supply when it leases its quota to another entity. The lease of the ITQ is a taxable supply in this case as the supply satisfies the requirements of a taxable supply under section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act.
Date of decision: 24 March 2000
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
subsection 9-10(1)
paragraph 9-10(2)(e)
Division 38
Division 40
ATO ID 2001/114 ATO ID 2001/115
Keywords
Goods and Services Tax
GST primary production
GST fishing
GST supplies acquisitions
GST supply
Taxable supply
ISSN: 1445-2782