ATO Interpretative Decision

ATO ID 2001/385

Goods and Services Tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a timeshare resort management body, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it imposes a maintenance/operating levy on unit owners?

Decision

Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it imposes a maintenance/operating levy on unit owners.

Facts

The entity is the management body for a timeshare resort complex. The entity is made up of unit owners.

The entity imposes a maintenance/operating levy on all the unit owners. The levies received are pooled together, and used to maintain and operate the resort.

The entity is registered for goods and services tax (GST). The resort is located in Australia and the operation and maintenance of the resort is in the course of the entity's enterprise.

Reasons for Decision

Section 9-5 of the GST Act provides you make a taxable supply if:

(a)

you make a supply for consideration; and

(b)

the supply is made in the course or furtherance of an enterprise that you carry on; and

(c)

the supply is connected with Australia; and

(d)

you are registered or required to be registered.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

The issue in this case is whether there is a 'supply' for 'consideration'.

'Supply' is defined in section 9-10 of the GST Act. Subparagraph 9-10(2)(g)(i) of the GST Act states that a supply includes an entry into, or release from, an obligation to do anything. In this case, the entity is entering into an obligation to operate and maintain the resort complex. Therefore, the entity is making a supply as defined in section 9-10 of the GST Act.

'Consideration' is defined in subsection 9-15 of the GST Act to include any payment, act or forbearance in connection with, in response to or for the inducement of a supply of anything. Additionally, subsection 9-15(2B) of the GST Act provides that the fact that the supplier is an entity of which the recipient of the supply is a member, or that the supplier is an entity that only makes supplies to its members, does not prevent the payment, act or forbearance from being consideration. In this case, the payment of the levy by the unit owners to the entity is consideration as defined in section 9-15 of the GST Act.

From the facts, the remaining requirements in section 9-5 of the GST Act have been met.

The entity is registered and the supply meets the other positive requirements of 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. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 9-10
   subparagraph 9-10(2)(g)(i)
   section 9-15
   subsection 9-15(2B)
   Division 38
   Division 40

Keywords
Goods and services tax
GST consideration
GST supply
Taxable supply

Business Line:  GST

Date of publication:  29 September 2001

ISSN: 1445-2782