Edited version of private advice

Authorisation Number: 1052480665836

Date of advice: 1 December 2025

Ruling

Subject: GST - and supply of water

Question 1

Is your supply of water GST-free under section 38-285 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes.

Question 2

Is GST payable by you on your supply of water under section 9-40 of the GST Act?

Answer

No, GST is not payable by you on your supply of water. However, if you have treated your supply as taxable and have passed on GST to your customer and reported GST on the supply in a Business Activity Statement (BAS), you can only obtain a refund of the GST you paid from the Australian Taxation Office in respect of that supply, provided you first give a GST refund to your customer.

This ruling applies for the following period:

DD MM YYYY

The scheme commenced on:

DD MM YYYY

Relevant facts and circumstances

You are registered for GST.

You carry on a business of supplying potable water for various uses.

You supply the water always over 100 litres coming from municipal water supply sources. The entities that supply water to you do not charge GST on their supplies of water to you. The truck has a water storage capacity of more than 100 litres.

You never supply the water in a container that has a capacity of less than 100 litres. Additionally, you never transfer the water into a customer's container that has a capacity of less than 100 litres.

You have treated your supplies of water as taxable and passed on GST to customers in respect of supplies you made in the past. You have reported these GST amounts in BASs.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 section 38-285

A New Tax System (Goods and Services Tax) Act 1999 Division 142

Reasons for decision

Issue

GST and supply of water

Question 1

Is your supply of water to a customer a GST-free supply under section 38-285 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Reasons

Section 38-285 of the GST Act states:

(1)         A supply of water is GST-free.

(2)         However, a supply of water is not GST-free under this section if it is:

(a)      supplied in a container; or

(b)      transferred into a container;

that has a capacity of less than 100 litres or such other quantity as the regulations specify.

(3)         It does not matter whether or not the amount of water supplied or transferred fills the container.

In your case, you are supplying water.

You never supply the water in a container that has a capacity of less than 100 litres. Additionally, you never transfer the water into a customer's container that has a capacity of less than 100 litres. Therefore, your supply of water is GST-free under section 38-285 of the GST Act.

Question 2:

Is GST payable by you on your supply of water under section 9-40 of the GST Act?

Reasons

GST is payable on taxable supplies.

In accordance with section 9-40 of the GST Act, you are liable for the GST payable on any taxable supply that you make.

A supply is a taxable supply under section 9-5 of the GST Act if:

(a)         the supplier makes the supply for consideration; and

(b)         the supply is made in the course or furtherance of an enterprise that the supplier carries on; and

(c)         the supply is connected with Australia; and

(d)         the supplier is registered or required to be registered for GST.

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

Your supply of water is GST-free, which ordinarily means that GST is not payable to the Australian Taxation Office (Tax Office) on the supply.

However, there is a special overriding rule in Division 142 of the GST Act. Pursuant to Division 142 of the GST Act, if you passed on GST to customers in the past and reported GST on these supplies in your Business Activity Statements (BAS), the GST Act treats you as having a GST liability to the Tax Office on these past supplies unless and until you have refunded to the customers concerned the amount you charged them for GST.

Where you have passed on GST to a customer and reported GST on the supply in a BAS, you can only obtain a refund of GST from the Tax Office in respect of that supply if you first give a GST refund to your customer.