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Edited version of your private ruling

Authorisation Number: 1012376022636

Ruling

Subject: GST and Australian taxes fees or charges

Question

Are payments of specified taxes, fees and charges imposed on or after 1 July 2013 excluded from GST under Division 81 or any other provision of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes. Payments of the specified taxes, fees and charges imposed on or after 1 July 2013 are excluded from GST under Division 81 or another provision of the GST Act.

Relevant facts and circumstances

You are a government entity and are registered for GST.

You seek a ruling in relation to taxes, fees or charges that you impose from 1 July 2013.

Relevant legislative provisions

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

Division 81 of the GST Act

Reasons for decision

Section 9-5 of the GST Act provides that you make a taxable supply if:

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

The term 'supply' is defined in section 9-10 of the GST Act as 'any form of supply whatsoever' and includes amongst other things, a supply of goods, a supply of services, a provision of advice or information, an entry into, or release from, an obligation to do anything, to refrain from an act or to tolerate an act or situation.

Subsection 9-15(1) of the GST Act provides that consideration includes:

The circumstances in which a supply is GST-free or input taxed are found in Division 38 and Division 40 of the GST Act respectively.

Section 9-39 of the GST Act provides special rules in relation to making taxable supplies. In particular, item 8 in the table in section 9-39 of the GST Act provides that where there is a payment of taxes, fees and charges, the special rules in Division 81 of the GST Act may apply.

Division 81 of the GST Act

Until 1 July 2011, payment of Australian taxes, fees and charges were treated as consideration for a supply, except to the extent that the Australian tax, fee or charge was listed in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 1) (Treasurer's Determination).

Division 81 of the GST Act was amended with effect from 1 July 2011 to allow entities to self assess the GST treatment of a payment of an Australian tax or an Australian fee or charge.

As a transitional measure, taxes, fees and charges listed in the Treasurer's Determination as at 30 June 2011 remain exempt where imposed before 1 July 2013.

Australian taxes

Section 81-5 of the GST Act states that 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 tax. While there is provision in the legislation to make regulations to specifically prescribe payments as consideration for a taxable supply, no regulations have currently been made in relation to subsection 81-5 (2) of the GST Act.

An Australian tax and an Australian fee or charge is defined in section 195-1 of the GST Act as:

An Australian government agency and an Australian law are terms defined in section 995-1 of the ITAA 1997 as:

Under this definition you are an Australian government agency.

Items A, B, C and D

Consideration is to be given to whether these items are an Australian tax.

Broadly, a tax is 'a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered'.

We consider that these imposts possess the characteristics of a tax as the imposts are:

On this basis these imposts are an Australian tax for the purposes of Division 81 of the GST Act. As these payments are not the 'provision of consideration' under subsection 81-5(1) of the GST Act, the requirement under section 9-5 of the GST Act that there is 'a supply for consideration' has not been satisfied. It follows that the payments of these taxes are excluded from GST.

Items E, F, G

The specified fees are Australian fees and charges. These fees are not an Australian tax as services are provided in relation to the fees. All fees and charges are imposed under an Australian law and payable to an Australian government agency.

Consideration will be given to whether these items are fees and charges that are covered by subsections 81-10(4) or (5) of the GST Act.

Subsection 81-10(1) of the GST Act provides that 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 subsections 81-10(4) or (5) of the GST Act.

However, under subsection 81-10(2) of the GST Act a payment made by an entity, or the discharge of a liability to make a payment, is treated as the provision of consideration to the extent the payment is an Australian fee or charge that is, or is of a kind, prescribed by the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations). The consideration is taken to be provided to the entity to which the fee or charge is payable, for a supply that the entity makes to the paying entity pursuant to subsection 81-10(3) of the GST Act.

Subsection 81-10(4) of the GST Act covers a fee or charge if the fee or charge:

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

Subsections 81-10(2) and (3) of the GST Act narrow the operation of subsection 81-10(1) by treating fees or charges that are prescribed in subregulation 81-10.01(1) of the GST Regulations as the provision of consideration for a supply. Subregulation 81-10.01(1) makes fees or charges that would otherwise be exempt from GST under the operation of subsections 81-10(4) or (5) of the GST Act potentially taxable. We consider that subsection 81-10(2) of the GST Act does not apply to the fees or charges listed at E, F and G because these fees or charges are not prescribed in GST subregulation 81-10.01(1).

As the listed fees are covered by subsection 81-10(4), the payments for these fees are not the provision of consideration under subsection 81-10(1). This means that the requirement under section 9-5 of the GST Act that there is 'a supply for consideration' has not been satisfied. Therefore these payments are excluded from GST.

Items H, I, J

The special rules in Division 81 do not apply to items H, I J because Division 81 only applies to taxable supplies.

Section 9-15 of the GST Act provides that a payment will be consideration if the payment is in connection with a supply. Items H, I, J do not constitute consideration for a supply because there is no supply in return for the payments. The payment of these funds is not in connection with a supply for the purposes of section 9-5 of the GST Act. Accordingly, GST does not apply.

Item K

Item K is not an Australian tax because the levy is not imposed for a general revenue raising purpose.

Section 81-15 of the GST Act allows for regulations to specify that the payment of a prescribed Australian fee or charge is not the provision of consideration. The relevant regulation is GST Regulation 81-15.01 which took effect from 1 July 2012.

Subregulation 81-15.01(1) of the GST Regulations provides, amongst other things, that for section 81-15 of the GST Act, the following kinds of Australian fees or charges do not constitute consideration:

Regulations made under section 81-15 add to the operation of subsections 81-10(4) and (5) of the Act to provide for the exempt status of Australian fees and charges that may not otherwise be covered under the Act. Accordingly, a supply to which the fee or charge may relate will not be subject to GST.

We hold the view that item K is a fee or charge that is covered by paragraph 81-15.01(1)(c) of the GST Regulations. The accompanying Explanatory Statement to paragraph 81-15.01(1)(c) explains that fees and charges imposed on industries to finance related regulatory or other government activities are not the provision of consideration because the payment does not relate to specific supplies. Consequently, item K is not the provision of consideration under section 81-15 of the GST Act. Therefore GST does not apply.

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