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Edited version of your written advice

Authorisation Number: 1051192330198

Date of advice: 21 June 2017

Ruling

Subject: GST and waste management services

Question

Is the payment to Entity A (you) of the following charges for the provision of waste management services relating to the collection of residential and commercial waste consideration for a taxable supply that you make:

    ● charges for the kerbside collection of waste

    ● charges for the supply, exchange or removal of bins or crates used in connection with the collection?

Answer

No, the payment to you of the charges for the provision of waste management services (WMS) relating to the collection of residential and commercial waste is treated as not being the provision of consideration for a supply and is not subject to GST.

Relevant facts and circumstances

You are a local government entity.

You are registered for GST.

Your levy charges are in relation to the provision of WMS which you supply to both residential and commercial ratepayers and other parties in your local government area.

You supply regular WMS related to the collection of both residential and commercial waste. The WMS include:

    ● collection, transport, storage, treatment, processing, sorting, recycling or disposal of waste

    ● provision of receptacles for the temporary deposit of waste.

Generally, the WMS involve the supply of a bin or bins and collection of waste at regular intervals at or near the kerbside. Depending on the particular premises, the collection point could also be at the side, rear or underneath the premises such as the basement of high rise apartments.

You levy the WMS charges under State legislation.

There are suppliers (private suppliers) of residential and commercial WMS to properties in your local government area that are not an Australian government agency.

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 Division 81

A New Tax System (Goods and Services Tax) Act 1999 section 81-10

A New Tax System (Goods and Services Tax) Act 1999 subsection 81-10(4)

A New Tax System (Goods and Services Tax) Act 1999 subsection 81-10(5)

A New Tax System (Goods and Services Tax) Act 1999 section 81-15

A New Tax System (Goods and Services Tax) Regulations 1999 paragraph 81-10.01(1)(h)

A New Tax System (Goods and Services Tax) Regulations 1999 Regulation 81-15.01

A New Tax System (Goods and Services Tax) Regulations 1999 paragraph 81-15.01(1)(a)

A New Tax System (Goods and Services Tax) Regulations 1999 subregulation 81-15.01(2)

Reasons for decision

All legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise stated.

Under section 9-5 one of the requirements for making a taxable supply is that you make a supply for consideration.

However, special rules in Division 81 apply to the payment (or the discharging of the liability to make a payment) of Australian fees or charges, to an Australian government agency (AGA) by an entity which is liable for the fee or charge under the provisions of the applicable Australian law. The payment of fees or charges to which Division 81 applies is treated as not being the provision of consideration and is not subject to GST.

In particular, Division 81 provides for regulations to prescribe Australian fees and charges for certain kinds of supplies which do not constitute consideration. Regulation 81-15.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) sets out those fees and charges that are prescribed for section 81-15. Paragraph 81-15.01(1)(a) of the GST Regulations prescribes a fee or charge for:

    ● the kerbside collection of waste, or

    ● the supply, exchange or removal of bins or crates used in connection with the kerbside collection of waste.

The term 'waste’ includes green waste and recyclables under subregulation 81-15.01(2) of the GST Regulations.

To determine if the WMS charges you levy are an Australian fee or charge to which Division 81 applies it is first necessary to examine if they are imposed under an Australian law and whether you are an AGA.

The State legislation, under which you impose the charges, is an Australian law. Also, for the purposes of this Ruling, it is accepted that you come within the definition of an AGA.

Accordingly, the WMS charges payable to you are an Australian fee or charge.

Having established that the WMS charges are an Australian fee or charge, it is next necessary to examine if they are for a supply of a kind to which Division 81 applies. In particular, it is necessary to examine if they are a fee or charge prescribed by paragraph 81-15.01(1)(a) of the GST Regulations for the kerbside collection of waste or the supply, exchange or removal of bins or crates used in connection with the kerbside collection of waste.

In your case, you supply regular WMS related to the collection of both residential and commercial waste. The WMS include:

    ● collection, transport, storage, treatment, processing, sorting, recycling or disposal of waste

    ● provision of receptacles for the temporary deposit of waste.

The WMS you supply also involve the supply of a bin or bins and collection of waste at regular intervals at or near the kerbside. Depending on the particular premises, the collection point could also be at the side, rear or underneath the premises such as the basement of high rise apartments.

Further, there are private suppliers of residential and commercial WMS to properties in your local government area.

The explanatory statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No.2) (ES) states the following in relation to fees and charges for the kerbside collection of waste:

    Fees and charges for kerbside collection of waste

    Item – paragraph 81-15.01(1)(a) and subregulation 81-15.01(2)

    This paragraph and subregulation ensure that fees and charges for the kerbside collection of waste are not treated as the provision of consideration, and therefore do not give rise to a taxable supply under Division 81.

    Kerbside waste collection fees are often, but not always, covered by general council rates. It is intended that all fees and charges for kerbside collection of waste are not consideration for a supply, so that these services are exempt from GST. This is regardless of whether the fees paid in relation to the service are compulsory or optional as kerbside collection of waste is a basic activity of local government.

    Kerbside collection includes a regular waste collection service conducted by an Australian government agency where, for practical reasons, the waste must be collected from inside the property boundary of the ratepayer, such as a waste service for residents of a high-rise residential complex. However, additional waste collection undertaken by a commercial entity is not considered to be kerbside collection even though it may be collected from the kerbside in some circumstances.

    Examples of Australian fees and charges that will fall within this paragraph include, but are not limited to:

      ● Fees for kerbside collection of green waste as part of the normal kerbside waste collection stream;

      ● Fees for supply, exchange or removal of bins or crates used in connection with kerbside waste, including recyclables; and

      ● Fees for removal of waste from high rise residential apartments where residents have paid for this on their rates notice.

Of particular relevance in your case is the explanation in the ES of the scope of the operation of paragraph 81-15.01(1)(a) of the GST Regulations in relation to kerbside collection of waste, noting that the service is a basic activity of local government. Consistent with this explanation, in circumstances where private suppliers can also make kerbside collection of waste or supply, exchange or remove bins or crates used in the connection with the kerbside collection of waste, the relevant provisions under which the supply is to be considered are section 81-15 and paragraph 81-15.01(1)(a).

It is considered that the WMS charges you levy are for a supply of a kind prescribed by paragraph 81-15.01(1)(a) of the GST Regulations for the kerbside collection of waste or the supply, exchange or removal of bins or crates used in connection with the kerbside collection of waste.

Therefore, the payment to you of the charges for the provision of WMS relating to the collection of residential and commercial waste is the payment of an Australian fee or charge to which Division 81 applies. The payment is treated as not being the provision of consideration for a supply and is not subject to GST.

Note: The provisions of section 81-10 (which is about fees or charges that do constitute consideration) and paragraph 81-10.01(1)(h) of the GST Regulations (which is about supplies by an AGA where the supply may also be made by a supplier that is not an AGA) do not apply to fees or charges for the kerbside collection of waste, as the fee or charge must first be covered by subsections 81-10(4) or (5).