Edited version of private ruling

Authorisation Number: 1011498526701

Subject: whether payments are payments specifically covered by an appropriation under an Australian law

Question 1:

Is the payment of funds by a Council established under Commonwealth legislation ('Council') to a university ('University') as the Administering Organisation pursuant to a Funding Agreement for certain research ('Funding Agreement ') a payment made by a government related entity to another government related entity which is specifically covered by an appropriation under an Australian law within the meaning of paragraph 9-15(3)(c) of the A New Tax System (Goods and Services Tax) Act 1999 ('GST Act')?

Answer:

No, the payment of funds by the Council to the University as the Administering Organisation pursuant to the Funding Agreement is not a payment made by a government related entity to another government related entity which is specifically covered by an appropriation under an Australian law within the meaning of paragraph 9-15(3)(c) of the GST Act because it is not a payment of a funding nature as required by Goods and Services Tax Ruling GSTR 2006/11. In addition that payment is not 'specifically covered' by an appropriation under an Australian law as that term is understood following the Full Federal Court's decision in TT Line Company v Commissioner of Taxation 2009 ACT 20-157.

Question 2:

Is the subsequent distribution of those funds by the University (as the Administering Organisation) to the Collaborating Organisations listed in that Funding Agreement a payment made by a government related entity to another government related entity which is specifically covered by an appropriation under an Australian law within the meaning of paragraph 9-15(3)(c) of the GST Act and therefore not the provision of consideration?

Answer:

No, the subsequent distribution of those funds by the University (as the Administering Organisation) to the Collaborating Organisations listed in that Funding Agreement is not a payment made by a government related entity to another government related entity which is specifically covered by an appropriation under an Australian law within the meaning of paragraph 9-15(3)(c) of the GST Act because it is not a payment of a funding nature as required by Goods and Services Tax Ruling GSTR 2006/11. In addition that payment is not 'specifically covered' by an appropriation under an Australian law as that term is understood following the Full Federal Court's decision in TT Line Company v Commissioner of Taxation.

Relevant facts and circumstances:

The Parties:

The Council is established by Commonwealth legislation and consists of a CEO, designated committees, and staff.

The University is established by State legislation as a body corporate vested with full juristic capacity and unfettered discretion to conduct its affairs in the manner it thinks fit.

The Commonwealth legislation:

The objects if the Commonwealth legislation include establishing a body for purposes which include the administration of the regimes of financial assistance.

The Division of the Commonwealth legislation dealing with funding of research provides for an annual cap on funding for research and provides the relevant Minister to issue a written determination dividing the funding cap between such categories of research as the Minister specifies.

The Commonwealth legislation provides for the Minister to approve a proposal for expenditure by an approved organisation on an approved program provided that a set of Funding Rules to which the proposal relates is in force, the proposal satisfies the eligibility criteria set out in those Funding Rules, and the application for financial assistance in the proposal satisfies the Funding Rules.

The Commonwealth legislation requires the Council's CEO to prepare Funding Rules before the start of each year which must deal with:

The eligibility criteria to be met in order for a proposal to be approved for financial assistance (including criteria relating to the kinds of organisation that may receive assistance and the kinds of research program in respect of which assistance may be provided);

The Funding Rules:

The Funding Rules state that funding under is provided to 'administering organisations', not to individuals.

'Administering organisation' is defined in the Funding Rules as an 'Eligible Organisation' which submits a Proposal for funding. 'Eligible Organisation' is defined as an organisation which is eligible to apply for funding under the Funding Rules.

The relevant Call for Proposals provides that Proposals can only be submitted by the Eligible Organisations specified in Appendix 1 and Appendix 1: Eligible Organisations lists universities in each State and Territory.

The Funding Rules require a Proposal to be submitted as a mature research plan ready for implementation and requires the Administering Organisation to obtain the agreement of all the collaborating and partner organisations to allow the Proposal to proceed. The Funding Rules set out the process and criteria for assessment of Proposals and provide that where a Proposal is approved a Funding Agreement is sent to the Administering Organisation for signing.

Funding Agreement:

The relevant Funding Agreement between the Council and the University provides:

Subject to Parliamentary appropriations, the provisions of the Act and the terms of this Agreement, the Commonwealth will, upon receipt of tax invoices, pay the Funds to the Administering Organisation in the amounts set out in Schedule A

Schedule A to the Funding Agreement identifies the University as the Administering Organisation.

Schedule A to the Funding Agreement also identifies a number of Collaborating Organisations and Partners and the Funding Agreement provides that all funding is subject to conditions including a requirement that the Administering Organisation enter into written agreements with each Collaborating Organisation and Partner Organisation which define the role and contribution of the Collaborating Organisation/ Partner Organisation, describe the intellectual property arrangements that apply to then outcome of the initiative, provide for the Collaborating Organisation/Partner's entry to and exit from the Initiative etc.

Collaborating Organisation Agreement:

Annexed to the Funding Agreement is a Collaborating Organisation Agreement ('COA') between the University and another Australian university as the Collaborating Organisation.

The COA provides that the Collaborating Organisation will conduct the Services (defined as the obligations, contributions and undertakings of the Collaborating Organisation as set out in the Schedule to the COA) in accordance with the Funding Rules, the Proposal and the objectives set out in the Funding Agreement. The COA provides:

The Administering Organisation will transfer to the Collaborating Organisation Funds as specified in the Schedule

Funding of Research Initiatives:

The Appropriation Act 2009-10 (Cth) includes (section 6 and schedule 1) an appropriation to the relevant portfolio.

A Budget Related Paper provides that the Outcome for the Council is:

Growth of knowledge and innovation through managing research funding schemes, measuring research excellence and providing advice

and sets out (Table 1) the resources provided to a number of agencies, including a 'departmental appropriation' and a 'special appropriation' for the Council.

The Commonwealth legislation governing the Council was amended by substituting the amount of the 'special appropriation' as the annual cap on funding for the financial year starting on 1 July 2009.

The Council's 2009-10 Portfolio Budget Statement includes an 'Agency Resource Statement' which includes the 'departmental appropriation' and 'special appropriation' referred to above, describes 'Outcome 1' as follows:

Outcome 1: Growth of knowledge and innovation through providing policy advice, measuring research excellence and managing research funding schemes

and includes a special appropriation for 'Program 1.2 Linkage - Cross Sector Research Partnerships':

Program 1.2 Deliverables

Through the Linkage Program the Council delivers funding for individual research projects, research fellowships, postgraduate awards and research centres via a range of schemes (listed under the Program objective above). Funding is awarded to administering organisations on the basis of a competitive peer review proves involving Australian and international experts.

Number of administering organisations: XX

Amounts awarded to administering organisations: $$$*

* Funding allocation for Linkage Projects and Linkage Infrastructure, Equipment and Facilities projects over the lives of the projects for funding commencing in calendar year.

Ruling request:

The ruling request referred to paragraph 9-15(3)(c) of the GST Act which provides that a payment made by a government related entity to another government related entity is not the provision of consideration if the payment is specifically covered by an appropriation under an Australian law.

In the ruling request the University submitted that the Council was a government related entity as the Council is an entity that has been established by the Commonwealth under an Australian law for a public purpose and can be separately identified by reference to the nature of the activities which the Council carries on. The University also submitted that both the University and the Collaborating Organisations which were also universities were also government related entities and that both payments by the Council to the University and by the University to the Collaborating Organisations satisfied the requirements of paragraph 9-15(3)(c) of the GST Act.

The ruling request did not address the requirement in paragraph 9-15(3)(c) that the payment made by one government related entity to another government related entity is specifically covered by an appropriation under an Australian law, although the University stated that every collaborating organisation named in Schedule A to the Funding Agreement is an Australian university established under State law.

Reasons for decision

Question 1:

Summary:

The payment by the Council to the University is not a payment of a funding nature as required by Goods and Services Tax Ruling GSTR 2006/11 and therefore not 'payment' as that term is used in paragraph 9-15(3)(c) of the GST Act. In addition, we consider that the payment by the Council to the University is not 'specifically covered' by an appropriation under an Australian law as that term is understood taking into account Goods and Services Tax Ruling GSTR 2006/11, the Full Federal Court's decision in TT Line, and the Tax Office's Decision Impact Statement dealing with the TT Line decision.

Detailed reasoning:

Paragraph 9-15(3)(c) of the GST Act provides:

However

…a payment made by a government related entity to another government related entity is not the provision of consideration if the payment is specifically covered by an appropriation under an Australian law

Goods and Services Tax Ruling GSTR 2006/11:

Goods and Services Tax Ruling GSTR 2006/11 states (Paras 15-16):

15. The policy intent behind the appropriations provision can be found in the following statement in Tax Reform, Not a New Tax, A New Tax System:

The Government's intention would be to apply the GST to the commercial activities of all levels of government in the normal manner. However, there are constitutional limitations on subjecting some activities of government to the GST…The non-commercial activities of government will be outside the scope of the GST. For example, appropriations for general government activities will not be taxable, nor will grants from one level of government to another, as neither constitutes consideration for a supply.

16. The appropriations provision is intended to exclude funding payments, which are non-commercial in nature, from the operation of GST, while not excluding payments which represent fees for goods, services and similar things. This is reflected in paragraph 1.16 of the Senate Supplementary Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1999:

For example, if a State government makes an appropriation to a State Crown department, there would be no GST on this payment as it would be covered by new paragraph 9-15(3)(c). If the department makes a further payment to a State authority under the appropriation, there would be no GST on this payment. If the authority distributes the money to various registered community bodies and the community bodies have to use the money for particular purposes (that is, the payments are not unconditional gifts), the payments to the community bodies will be consideration for a supply, and hence will be taxable.

Goods and Services Tax Ruling GSTR 2006/11 provides (Para 18) that one of the requirements of paragraph 9-15(3)(c) of the GST Act is that there must be an appropriation under an Australian law, that (Para 25) the dictionary definitions of 'appropriation' indicate that that term has both a general meaning and a 'government specific' meaning, and that (Para 25) the 'government specific' meaning is relevant for the purposes of paragraph 9-15(3)(c), i.e. that the payment must be specifically covered by 'an authorisation for the expenditure of money'.

Goods and Services Tax Ruling GSTR 2006/11 also provides (Para 29) that for an appropriation to be 'under an Australian law' there must be an authorisation for the expenditure of money by a statue of the Commonwealth, a State or a Territory, or by delegated legislation, in furtherance of a particular purpose.

Goods and Services Tax Ruling GSTR 2006/11 then addresses the meaning of 'payment' in paragraph 9-15(3)(c) of the GST Act and states (Para 30) that paragraph 9-15(3)(c) is intended to apply to 'payments of a funding nature', i.e.

…the Commissioner is of the view that for a payment to come within paragraph 9-15(3)(c) the payment has to be of a funding nature and not commercial in character.

Goods and Services Tax Ruling GSTR 2006/11 then explains the test for determining whether a payment is of a funding nature (Paras 32 -26):

32. When considering if paragraph 9-15(3)(c) applies to the payment, the purpose of the payment will be integral in characterising the payment as being of a funding nature or otherwise.

33. Not all payments between government related entities will be of a funding nature.

34. Accordingly, an agency may be funded by the allocation of government money under the authority of an appropriation Act, but when the funds are expended on goods and services to further the agency's operations, that expenditure will not be of a funding nature whether paid to a government related entity or a non-government related entity. At this point paragraph 9-15(3)(c) no longer has application and the basic GST rules apply.

35. Therefore, once the funds are allocated to the particular government related entity to be used in the course of its operations, any payments using those funds by that particular government related entity may not be made as an allocation of government money under the law appropriating the funds. The use of those funds, that is, payments made with the funds, to meet the particular government related entity's expenditure in the course of its operations, will not be payments of a funding nature. Therefore, paragraph 9-15(3)(c) will not be met and the basic GST rules will apply.

36. This accords with the intention as given in the Senate Supplementary Explanatory Memorandum, as noted in paragraph 16 of this Ruling. That is, where the funding transfer from the department to the State authority is otherwise covered by paragraph 9-15(3)(c), but the use of those funds by the State authority is in its operations, such as payments to the community bodies for services, those payments are meant to be subject to the basic GST rules.

Applying this test, we consider that the payment made by the Council to the University is a use of funds by the Council in the Council's operations and is not a payment of a funding nature and therefore not a payment to which paragraph 9-15(3)(c) of the GST Act applies. The Commonwealth legislation governing the Council provides that one of the purposes for which the Council is established is the administration of the regimes of financial assistance. Accordingly, once the Council received the 'special appropriation' in respect of 'Outcome 1' (which includes 'managing research funding schemes') the Council's Portfolio Budget Statement states that the 'Deliverable' required of the Council under 'Program 1.2: Linkage - cross sector research partnerships' was to deliver

…funding for individual research projects, research fellowships, postgraduate rewards and research centres via a range of schemes…

Our conclusion is also supported by the policy document Not a New Tax, a New Tax System referred to in Goods and Services Tax Ruling GSTR 2006/11 (Para 5) which states that that paragraph 9-15(3)(c) is not intended to exclude from the operation of GST 'payments which represent fees for goods, services and other things'. The Funding Rules state that research funding must be used to support pure basic research, strategic research, or applied research, that certain budget items (e.g. capital expenses) are excluded, and that work such as uncritical compilations are excluded. In addition researchers must 'have the capacity to make a serious commitment and contribution to the project' and the Funding Agreement obliges the University to ensure that the research initiative fulfils the objective of undertaking highly innovative research. We therefore consider that the payment to the University represents a payment for research services which meet the requirements of the Funding Rules and the Funding Agreement. As such the payment is not intended to be excluded from the operation of GST

Payment 'specifically covered' by an appropriation - review of Goods and Services Tax Ruling GSTR 2006/11:

Goods and Services Tax Ruling GSTR 2006/11 discusses the meaning of 'specifically covered' in paragraph 9-15(3)(c) of the GST Act (Para 48):

A payment authorised by an appropriation is an expenditure of money authorised by a statute or by delegated legislation. For Parliament to authorise expenditure it needs to specify the amount allocated. The payment is made so that particular outcomes or other purposes desired by Parliament are achieved. Hence, to be specifically covered the following must be specified:

· the purpose of the payment; and

· the amount of the payment.

Goods and Services Tax Ruling GSTR 2006/11 acknowledges (Para 52) that the purpose and amount of a payment is generally not specified in an Appropriation Act (which generally refers to high level 'outcomes' which provide only a brief outline of funding arrangements) and that the amount and purpose of a payment must be specified in the appropriation Act and supporting documents (e.g. Budget Papers, Portfolio Budget Statements and Agency Budget Statements plus Ministerial media releases, statements or speeches related to the Budget, Budget documents prepared at agency level, and written agreements such as Funding Deeds, Service Level Agreements or Memoranda of Understanding between government related entities)

The front page of Goods and Services Tax Ruling GSTR 2006/11 states that that ruling is under review as a result of a recent court decision and refers to the Tax Office's Decision Impact Statement issued on 19 May 2010 in respect of the decision issued on 18 December 2009 by the Full Federal Court in TT Line Company v Commissioner of Taxation 2009 ATC 20-157.

TT Line involved a payment made by the Commonwealth under the Bass Strait Passenger Vehicle Equalisation Scheme ('Bass Strait Scheme') which was aimed at reducing the cost of sea travel to Tasmania for eligible passengers.

At first instance (i.e. in the Federal Court - TT Line Co Pty Ltd v FCT 72 ATR 982), Stone J found (Para 17) that the Appropriation Act (No. 1) 2007-08 (Cth) appropriated $842 million to 'Transport and Regional Services', that the Schedule to that Act included 'Outcome 1: Fostering an efficient, sustainable, competitive, safe and secure transport system', and that the Portfolio Budget Statement listed the Bass Strait Scheme as an administrative program for Outcome 1. However Stone J noted that paragraph 9-15(3)(c) of the GST Act required the 'payment', not the Bass Strait Scheme, to be covered by an appropriation and required the payment to be 'specifically' covered by an appropriation (Paras 23-24):

I note, however, that the subsection, in referring to the payment that must be specifically covered, uses the definite article. It is the payment that is made to the government related entity that must be specifically covered. It is not sufficient for the payment to be consistent with a specified purpose. As the Commissioner submitted:

There is nothing in the [Bass Strait] Scheme that limits the recipient of a payment of a rebate to TT Line or any wider class of government related entities…

It is clear from the words of subsection (c) that it is not sufficient for payment merely to be made by one government related entity to another. In order for such a payment to be specifically covered by an appropriation it would, at the very least, be necessary for payments to be limited to government related entities. The fact that the Scheme allows for payment to a non-government related entity indicates that the appropriation is limited to a purpose not to a payee or class of payees. This is sufficient to dispose of the issue under s 9-15(3)(c) even if, as a matter of fact, no payments were made to non-government related entities.

TT Line unsuccessfully appealed to the Full Federal Court. There Edmonds J referred to Stone J's reasoning and to the Tax Office's submission that Stone J's decision was correct (Paras 55-56):

In the Commissioner's submission s. 9-15(3)(c) only applies where the purpose of the appropriation pursuant to which the payment is made is to appropriate money for payments specifically to government related entities. The circumstance that the recipient of the payment is a government related entity is not, on the Commissioner's argument, sufficient to attract the benefit of the provision if the appropriation, pursuant to which the payment is made, would permit payment to a non-government related entity, albeit for the same purpose…It is common ground that the appropriation in the present case would permit payment to a non-government related entity for the purposes of the Scheme.

The Commissioner submitted that such a construction is consistent with the overall intention of the GST legislation in its application to government and that the primary judge recognised this…According to the Commissioner, that intention was that the Commonwealth, State and local government and their instrumentalities should be subject to the GST Act is the same way as non-government organisations, but that appropriations for general government activities or grants from one level of government to another should be exempt from GST. The Commissioner submitted that s 9-15(3)(c) gives effect to this intention by creating a limited exception to the general subjection of government to GST which applies in the case of payments appropriated for the specific purpose of being made to government related entities. For this the Commissioner relied on Para 17 of the Intergovernmental Agreement which appears as Schedule 2 to the A New Tax System (Commonwealth-State Financial Arrangements) Act 1999 (Cth) and the Explanatory Memorandum to the Bill which introduced s 9-15(3)(c) into the GST Act.

Edmonds J concluded that the policy intent behind paragraph 9-15(3)(c) of the GST Act supported construction of that provision set out by Stone J and contended for by the Tax Office (Paras 62-63):

Not without some hesitation, I think that the answer to this question lies in the policy underlying the application and scope of the GST, namely that, generally, it is to apply to government related entities , organisations and instrumentalities - Commonwealth, State, and local - in the same way as it does to non-government entities and the like…So understood, there is created as between government related entities and non-government related entities supplying the same services a 'level playing field'. A payment, pursuant to an appropriation, for the supply of services which can, under the terms of the appropriation, be supplied by a government related entity or a non-government related entity should be subject to the same tax treatment; in other words, as taxable supplies irrespective of the status of the supplier. On the other hand, the potentiality for discrimination between government related and non-government related entities does not exist where, by the terms of the appropriation, the services can only be supplied by a government related entity. The exclusion created by s 9-15(3)(c) is only intended to operate in this limited class of case; it is not intended to extend to payments, pursuant to an appropriation, for a supply of services which can, under the terms of the appropriation, be supplied by a government related entity or a non-government related entity (even if the appropriation is otherwise specific as to the amount and particular purpose) because that would discriminate in favour of the government related entity contrary to the general policy underlying the application and scope of the GST Act.

So understood, it is not a giant leap to adopt a construction of s 9-15(3)(c) which confines it to payments pursuant to an appropriation the terms of which specify the government related entity by name or, generically, to those entities having that status. That is the minimum specificity of coverage that is required to be found in the terms of the appropriation for the exclusion to apply; whether it is sufficient, is something with which I need not be concerned because clearly, in the present case, the minimum specificity of coverage is not met.

Perram J agreed with Edmonds J's reasons, referred (Para 66) to clause 17 of the 1998 Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations:

The Parties intend that the Commonwealth, States, Territories and local government and their statutory corporations and authorities will operate as if they were subject to the GST legislation. They will be entitled to register, will pay GST or make voluntary or notional payments where necessary and will be entitled to claim input tax credits in the same way as non-Government organisations. All such payments will be included in GST revenue.

and stated (Para 69):

The learned primary judge thought that 'specifically' should be interpreted to mean 'expressly' or 'explicitly' and that those words qualified the payment. The appellant, on the other hand, contended that all that is meant is that appropriation must be sufficiently specific to cover the payment claimed to attract GST. The trial judge's view is, with respect, more consistent with clause 17. This is for the positive reason that expenditure by way of specific appropriation is unlikely to resemble any expenditure which a non-government organisation might make and hence to fall outside what is contemplated by cl 17. It is also for the negative reason identified by Emmett and Edmonds JJ that the appellant's position leaves non-government operators having to collect GST whilst exempting the appellant, an outcome inconsistent with the principle of equality underpinning cl 17.

The Tax Office's Decision Impact Statement in respect of the Full Federal Court's decision in TT Line refers to the reasoning of Edmonds and Perram JJ:

Edmonds J., with whom Perram J agreed, found that paragraph 9-15(3)(c) should be interpreted by reference to the underlying policy that the GST is generally to apply to government related entities, organisations and instrumentalities - Commonwealth, State, and local - in the same way as it does to non-government entities. The exclusion created by paragraph 9-15(3)(c) is only intended to operate where, by the terms of the appropriation, the services can only be supplied by a government related entity. It is not intended to extend to payments, pursuant to an appropriation, for a supply of services which can, under the terms of the appropriation, be supplied by a government related entity or a non-government related entity (even if the appropriation is otherwise specific as to the amount and its particular purpose).

Tax Office view of decision:

…

While favourable to the Commissioner, the reasoning of the Court in relation to the interpretation of paragraph 9-15(3)(c) differs to how the Commissioner has expressed his views on this issue in GSTR 2006/11. The view expressed in GSTR 2006/11 is that for a payment to come within paragraph 9-15(30(c), the payment has to be of a funding nature and not commercial in character.

Implications for current Public rulings and Determinations:

As noted above, the Commissioner's views as set out in GSTR 2006/11 in relation to the application of paragraph 9-15(3)(c) are expressed in different terms to the reasoning of the Court. The application of the decision to Example 10 in GSTR 2006/11, specifically paragraphs 91 to 93, may lead to a different outcome to that expressed in this example. The Commissioner will review GSTR 2006/11 to ensure that it is consistent with the Court's reasoning.

Following the TT Line decisions and the Decision Impact Statement, in order for a payment by one government related entity to another government related entity to be 'specifically covered by an appropriation under an Australian law' there must be:

an authorisation for the expenditure of money by a statue of the Commonwealth, a State or a Territory, or by delegated legislation (or by reference to relevant supporting documents such as Ministerial statements, speeches, or media releases related to a budget, documents prepared at agency level which are related to an Appropriation Act, Funding Deeds, Service Level Agreements or Memoranda of Understanding between government related entities); and

that authorisation must specify the purpose of the payment and the amount of the payment; and

that authorisation must specify that the payment is to be made to one or more government related entities which are specified either by name or generically.

Applying this view to the present case, we consider that there is an authorisation under and Australian law for expenditure of money in respect of the relevant research initiative because the Commonwealth legislation governing the Council was amended by increasing the Council's funding cap for the funding of research for the relevant year to match the 'special appropriation' referred to in the relevant Budget Paper. The Council's Portfolio Budget Statement allocates part of that 'special appropriation' to 'Program 1.2, which is stated to include Special Research Initiatives, and shows an amount awarded to administering organisations.

We also consider that the authorisation specifies the purpose and amount of the payment because the Council's 2009-10 Portfolio Budget Statement refers to 'Program Deliverables' which include individual research projects, research fellowships, postgraduate awards and research centres and states that funding is awarded to administering organisations on the basis of a competitive peer review process.

The authorisation, however, does not specify that the amount awarded to Administering Organisations must be paid to government related entities which are specified either by name or generically. Adopting Stone J's reasoning, it is the payment by the Council to the University which must be specifically covered by an appropriation and there is nothing in the statement in the Council's Portfolio Budget Statement, i.e.

Amounts awarded to administering organisations $1$$

that limits the recipients of those awards to government related entities.

The Council's Portfolio Budget Statement does refer to 'administering organisations' which the Funding Rules define as any Eligible Organisation which has successfully submitted a Proposal for funding. There is nothing in the Council's Portfolio Budget Statement, however, which restricts the Administering Organisations which are awarded funds to government related entities and the class of Eligible Organisations is determined by the Council's CEO (and approved by the Minister) when the Funding Rules are prepared.

We acknowledge that the Council's Portfolio Budget Statement states that the research funding program aims to:

Encourage end-user organisations…to partner with university-based researchers

and that the Eligible Organisations listed in the relevant Call for Proposal comprise Australian universities.

Most of the universities listed in the Call for Proposals fall within the 'government related entity' definition in section 195 of the GST Act, specifically paragraph (e) of the 'government entity' definition in the A New Tax System (Australian Business Number) Act 1999, ('ABN Act') i.e. an organisation that is not an entity, which is established for a public purpose by an Australian law, and can be separately identified by the nature of the activities carried on by that organisation. However two of the universities listed as Eligible Organisations in the Call for Proposals are not a 'government related entity' as each is an 'entity' (a company limited by guarantee) and not 'established for a public purpose by an Australian law' in the sense required by the 'government entity' definition in the ABN Act as they are simply incorporated under State Companies Codes Consequently we consider that the reference in the Council's Portfolio Budget Statement to:

Amounts awarded to administering organisations $$$

places the present case on all fours with TT Line where there was nothing in the reference to the Bass Strait Scheme in the relevant Portfolio Budget Statement which limited recipients of the payments to either specified government related entities or a class of government related entities.

Nor does it matter whether, as a matter of fact, all the Administering Organisations who received payments in relation to the relevant initiative were government related entities. In the Federal Court Stone J held (Para 24) that it was immaterial whether, as a matter of fact, no payments were made to non-government related entities.

Question 2:

For the reasons set out above in relation to Question 1 we consider that a payment by the University to a Collaborating Organisation listed in the Funding Agreement is not a payment of a funding nature as required by Goods and Services Tax Ruling GSTR 2006/11 and therefore not 'payment' as that term is used in paragraph 9-15(3)(c) of the GST Act.

Nor is such a payment 'specifically covered' by an appropriation under an Australian law as that term is understood taking into account both Goods and Services Tax Ruling GSTR 2006/11, the Full Federal Court's decision in TT Line, and the Tax Office's Decision Impact Statement.

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