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Ruling

Subject: GST and council fees and charges

Question 1

Are fees paid to the Council for residential parking permits, including permits for visitors and organisational carers, the provision of consideration for a taxable supply from 1 July 2012?

Answer

No.

Question 2

Are fees paid to the Council for library book reservations the provision of consideration for a taxable supply from 1 July 2012?

Answer

No.

Question 3

Are charges for replacement library borrower cards the provision of consideration for a taxable supply from 1 July 2012?

Answer

No.

Relevant facts and circumstances

You are a local governing body established by a relevant Act (the Act).

You impose fees in relation to the following:

· Residential parking permits

· Residential parking permits for visitors

· Residential parking permits for organisational carers

· Library book reservations

· Replacement library borrower cards

These fees are imposed under the Act and are payable to the Council.

Residential parking permits, including permits for visitors and organisational carers, allow residents of the municipality to park in particular zones near their residence, without restriction. This includes parking in spaces that are time-restricted, or have parking meters. Residents nominate the vehicle(s) and a sticker is issued for each vehicle.

Where a library book is unavailable, a reservation fee can be paid to place it on hold pending its return. During the period on hold, only the person who has reserved the book may borrow it.

Fees for replacement library borrower cards are paid when a borrower has lost or misplaced their card. The initial card is issued without a fee, but subsequent issues attract a fee. Without a card the person is unable to borrow, as there is a bar code on the card which needs to be used when borrowing books.

Relevant legislative provisions

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

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

Section 195-1 A New Tax System (Goods and Services Tax) Act 1999

Section 995-1 Income Tax Assessment Act 1997

Reasons for decision

Question 1

Summary

Residential parking permits, including permits for visitors and organisational carers are not subject to GST as they are not consideration for a supply.

Detailed reasoning

Section 9-5 of the GST Act states:

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 for GST.

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

(*denotes a defined term under the GST Act)

Where the supply is not for consideration then it is not captured by section 9-5 of the GST Act and is not taxable.

Division 81 of the GST Act exempts Australian taxes and certain fees and charges from GST on the basis that they are not consideration for a supply. Division 81 was amended with effect from 1 July 2011 to enable government agencies to self assess the GST treatment of taxes fees and charges.

Subsection 81-10(1) of the GST Act states:

A payment, or the discharging of a liability to make a payment, is not the provision of *consideration to the extent the payment is an *Australian fee or charge that is of a kind covered by subsection (4) or (5).

Subsection 81-10(4) of the GST Act states:

This subsection covers a fee or charge if the fee or charge:

(a) relates to; or

(b) relates to an application for;

the provision, retention, or amendment, under an *Australian law, of a permission, exemption, authority or licence (however described).

Section 195-1 of the GST Act states that an Australian fee or charge means a fee or charge (however described), other than an *Australian tax, imposed under an *Australian law and payable to an *Australian government agency.

Australian government agency has the meaning given by section 995-1 of the Income Tax Assessment Act 1997 which states:

Australian government agency means:

(a) the Commonwealth, a State or a Territory; or

(b) an authority of the Commonwealth or of a State or a Territory.

Those Australian taxes or Australian fees and charges that are not covered by Division 81 and that meet the requirements of section 9-5 of the GST Act will be taxable supplies, unless excluded by regulation.

You are a local governing body established by State law and meets the definition of an Australian government agency as you are an authority of the State.

Fees in relation to residential parking permits are imposed under the relevant Act. Therefore permit fees fall within the definition of Australian fee or charge as they are imposed under an Australian law and are payable to an Australian government agency.

Fees for a residential parking permit allow residents of the municipality to park in particular zones without restriction. This includes parking in spaces that have parking meters or which would normally be time restricted. The fee for such a permit therefore relates to a permission to park a nominated vehicle without restriction of time. As such, these fees fall within subsection 81-10(4) of the GST Act.

Fees for parking permits can be distinguished from a fee for parking a vehicle in a particular space for a set amount of time. In these instances the driver would purchase a ticket or pay a meter fee to park the vehicle. These parks are available to the general public to park in. Often there are other car parking facilities provided by the private sector and therefore the fees for metered parks are commercial in nature. Such fees are covered by Regulation 81-10.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) and are therefore consideration for a supply.

Residential parking permits provide a general permission to park but only to residents of the municipality. Whilst these permits enable the holder to park in a metered park without restriction, they are not restricted to metered or ticketed parking spaces. These fees are not commercial in nature as they relate to a broad range of parks, rather than a fee for a specific park for a specific time. Therefore they do not fall within Regulation 81-10.01(a) of the GST Regulations.

Fees for residential parking permits are not the provision of consideration under item 10.45 of the A New Tax System (Goods and Services Tax) (Exempt taxes, fees and charges) Determination 2011 (No.1) (the Determination). Item 16 of Schedule 4 of the Tax Laws Amendment (2011 Measures No. 2) Bill 2011 states that Australian taxes, fees and charges that were exempt under the Determination will continue to be exempt until 1 July 2012.

Question 2

Summary

Fees for library book reservations are not subject to GST as they are not consideration for a supply.

Detailed reasoning

You charge a fee to reserve a library book. These fees are imposed under the Act and therefore fall within the definition of Australian fee or charge as they are imposed under an Australian law and are payable to an Australian government agency. However for such a fee to be exempt under subsection 81-10(4) of the GST Act it must relate to the provision, retention, or amendment, under an Australian law, of a permission, exemption, authority or licence (however described).

Payment of the fee ensures that when the library book is returned, it is held for a period of time to enable the person who has reserved it to borrow it. Payment of the fee ensures that the borrower who pays the fee is able to borrow the book ahead of any other borrower. The fee therefore has the character of permission as it is permitting the borrower to borrow ahead of other library users. The fee is a fee or charge covered by subsection 81-10(4) of the GST Act as it relates to the retention under an Australian law of a permission. Therefore the fee for reserving a library book is not consideration for a supply.

Question 3

Summary

Fees for replacement library borrower cards are not subject to GST as they are not consideration for a supply.

Detailed reasoning

You charge a fee for replacement library borrower cards. These fees are imposed under the relevant Act and therefore fall within the definition of Australian fee or charge as they are imposed under an Australian law and are payable to an Australian government agency. However for such a fee to be exempt under subsection 81-10(4) of the GST Act it must relate to the provision, retention, or amendment, under an Australian law, of a permission, exemption, authority or licence (however described).

The library borrower card permits the holder to borrow library books. Without a card, you cannot borrow from the library. Although the initial library card is issued free, a replacement attracts a fee. Without paying the fee and being issued with a replacement, the borrower has no ability to borrow. Therefore the fee paid enables the person to borrow and as such the fee has the character of permission. The fee is a fee or charge covered by subsection 81-10(4) of the GST Act as it relates to the retention under an Australian law of a permission. Therefore fees for replacement library borrower cards are not consideration for a supply.

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