ATO Interpretative Decision
ATO ID 2001/115
Goods and Services Tax
GST and Temporary exchange of a fishing quotaFOI status: may be released
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This ATO ID has been amended to improve clarity and update legislative references.
With effect from 1 July 2015, the term 'Australia' is replaced in nearly all instances within the GST, Luxury Car Tax and Wine Equalisation Tax legislation with the term 'indirect tax zone' by the Treasury Legislation Amendment (Repeal Day) Act 2015. The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts. For readability and other reasons, where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act.
This document has changed over time. View its history.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 entity A, 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 temporarily exchanges its quota with the quota of entity B?
Decision
Yes, entity A is making a taxable supply under section 9-5 of the GST Act when it temporarily exchanges 'individual transferable quotas' with entity B.
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).
Entity A holds an ITQ. It agrees to exchange ITQs with entity B for one year. The ITQs revert back to the original holders at the end of the year.
Entity A is registered for goods and services tax (GST). The temporary exchange of ITQs is in the course of entity A's enterprise and is connected with Australia.
Reasons For Decision
An entity makes a taxable supply where the requirements of section 9-5 of the GST Act are satisfied. One of the requirements of a taxable supply is that an entity must make a supply for consideration (see paragraph 9-5(a) of the GST Act).
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 exchange of these rights is therefore a supply within the specific meaning of the term under paragraph 9-10(2)(e) of the GST Act.
Consideration is defined in section 195-1 of the GST Act to mean 'any consideration within the meaning given by sections 9-15 and 9-17, in connection with the supply.'
Subsection 9-15(1) of the GST Act provides that a payment, or any act or forbearance is consideration for a supply if it is 'in connection with', 'in response to or for the inducement of' a supply. Paragraph 12 of Goods and Services Tax Ruling GSTR 2001/6 also provides that consideration includes a payment in a non-monetary or in an 'in kind' form. This includes acts, forbearances, and goods or property.
The consideration, in this instance, is non-monetary in that the consideration for the supply made by entity A of its quota to entity B is the supply of entity's B quota to entity A.
Accordingly, entity A makes a supply for consideration when it exchanges its quota with the quota of entity B. The supply of the ITQ by entity A is a taxable supply in this case as the supply satisfies the other 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.
In the case of non-monetary consideration, the price of the supply will be its GST inclusive market value (paragraph 9-75(1)(b) of the GST Act).]
Amendment History
| Date of amendment | Part | Comment |
|---|---|---|
| 22 April 2013 | Issue | Space inserted after the word 'quota' |
| Reason for Decision | Amended by inserting section 9-17. As of 1 July 2012, section 9-17 is included within the definition of consideration as defined by section 195-1. | |
| Legislative References | Section 9-15 and section 9-17 added |
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
subsection 9-5(a)
subsection 9-10(1)
paragraph 9-10(2)(e)
section 9-15
paragraph 9-15(1)(a)
section 9-17
paragraph 9-75(1)(b)
Division 38
Division 40
section 195-1
ATO ID 2001/113 ATO ID 2001/114
Keywords
Goods and Services Tax
GST primary production
GST fishing
GST supplies acquisitions
GST supply
Taxable supply
ISSN: 1445-2782
| Date: | Version: | |
| 24 March 2000 | Original statement | |
| You are here | 22 April 2013 | Updated statement |