ATO Interpretative Decision
ATO ID 2001/135
Goods and Services Tax
GST and supply of emission credits/ carbon tradingFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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, a trader of emission credits, making a GST-free supply under item 4 of subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies those emission credits to non-resident entities for use outside of Australia?
Decision
Yes, the entity is making a GST-free supply under item 4 of subsection 38-190(1) of the GST Act when it supplies emission credits to non-resident entities for use outside of Australia.
Facts
The entity is a trader of emission credits. In this case, the entity is supplying emission credits to non-resident entities for use outside of Australia.
Emission credits are a chose in action, that is, they are an intangible right.
The entity is an Australian resident company that is registered for goods and services tax (GST).
Reasons For Decision
Under section 38-190 of the GST Act, certain supplies of things other than goods or real property, for consumption outside of Australia, are GST-free.
As emission credits are a right, they are most relevantly considered under item 4 of subsection 38-190(1) of the GST Act, which deals with the supply of rights. Item 4 provides that a supply that is made in relation to rights will be GST-free if:
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- the rights are for use outside Australia; or
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- the supply is to an entity that is not an Australian resident and is outside Australia when the thing supplied is done.
In this case, as the supply of emission credits to non-resident entities for use outside Australia is the supply of a right for use outside of Australia. Therefore, the entity is making a GST-free supply under item 4 of subsection 38-190(1) of the GST Act.
Date of decision: 19 July 2000
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 38-190
subsection 38-190(1) Item 4
Keywords
Goods & services tax
Exports
Consumption outside Australia
GST free
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 19 July 2000 | Original statement |
| 2 December 2005 | Archived |