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Ruling

Subject: GST status of fees and charges for supplies associated with Mooring Licences

Question 1

Are the fees and charges imposed by a government body (you) in relation to supplies associated with occupation (mooring) licences subject to goods and services tax (GST)?

In particular;

Fees charged in relation to the supply of private mooring licences (PMLs)

· Annual fee

· Substitute vessel fee

· Transfer fee

· Priority waiting list fee

Fees charged in relation to the supply of commercial mooring licences (CMLs)

· Annual fee

· Transfer fee (per site)

Fees charged in relation to the supply of both PMLs and CMLs

· Initial inspection fee

· Relocation fee

· Special attendance fee

· Costs associated with the temporary removal of moorings

· Duplicate licence fee

· Reinstatement of licence fee

· Temporary visitor use?

Answer

Yes. All of the fees listed constitute the provision of consideration under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). They are fees that relate to the use of a facility.

Therefore the supply or supplies to which they relate are subject to GST under normal principles.

Relevant facts and circumstances

· You are a Government agency. You are registered for GST.

· Your responsibilities include marine safety and regulation of commercial and recreational boating under relevant legislation and supporting regulations.

· Such regulations have been made which provide that a floating object, an apparatus or a vessel shall not be caused to occupy any navigable waters except under the authority of and in accordance with the conditions attached to, an occupation licence issued in respect of the floating object, the apparatus or vessel.

· An occupation licence is defined as a licence issued for the occupation of a specified locality in navigable waters by any floating object, apparatus or vessel of a specified class.

· You issue two types of occupation licences, also known as mooring licences:

o Private mooring licences, issued to an individual providing permission to permanently moor a vessel in a particular location; and

o Commercial mooring licences, issued to organisations which either provide approved marine services or carry on a business which cannot be accessed by means other than water

· Currently your fees are listed as not being subject to GST in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No.1).

· The fees you charge are described in further detail below:

PML fees

· Annual fee (payable for an occupation licence and annually for renewal of an occupation licence)

· Substitute vessel fee (payable for the cancellation of a current licence and issue of a substitute licence in respect of another vessel owned by the applicant)

· Transfer fee (payable for the transfer of an occupation licence by the lessee or purchaser of the business, floating object, apparatus or vessel to which the licence relates)

· Priority waiting list fee (payable for the placement of an applicant on a priority waiting list which is established where the location in which the mooring licence is desired has no vacant private mooring sites available)

CML fees

· Annual fee (payable for an occupation licence and annually for renewal of an occupation licence)

· Transfer fee (per site) (payable for the transfer of an occupation licence by the lessee or purchaser of the business, floating object, apparatus or vessel to which the licence relates)

Fees for PMLs and CMLs

· Initial inspection fee (payable for an initial inspection of the site upon notification that a mooring site which is the subject of the application is available for use)

· Relocation fee (payable for the granting of a request by the licensee to relocate the licensee's mooring apparatus)

· Special attendance fee (payable for the attendance of an officer at any site, locality or place on any Saturday, Sunday or public holiday, or on any other day before 9am or after 4pm).

· Costs associated with the temporary removal of moorings (payable for the removal of mooring apparatus where such direction has not been complied with by the applicant at its own cost)

· Duplicate licence fee (payable for the replacement of a mooring licence)

· Reinstatement of licence fee (payable for the late renewal of an existing mooring licence fee)

· Temporary visitor use (payable for the temporary use of a mooring licence by a visiting vessel from a different waterway).

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 9-5

Section 9-20

Section 9-25

Section 195-1

Division 81

A New Tax System (Goods and Services Tax) Regulations 1999

Division 81

Reasons for decision

Summary

All of the fees described constitute the provision of consideration under Division 81 of the GST Act. They are fees that relate to the use of a facility.

Therefore the supply or supplies to which they relate are subject to GST under normal principles.

Detailed reasoning

GST is payable on taxable supplies. Section 9-5 of the GST Act provides that you make a taxable supply if:

(a) you make the 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.

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

You provide occupation licences in the course of your administrative responsibilities, and an enterprise includes an activity or series of activities done by the Commonwealth, a State or a Territory (section 9-20 GST Act). Therefore you are making the supply in the course or furtherance of an enterprise that you carry on.

This is a supply that is connected with Australia as the granting of the licence takes place in Australia, and concerns submerged land in Australia. You are also registered for GST. Where your supply is for consideration, you will meet all the requirements of section 9-5 of the GST Act.

Where that is the case your supplies of occupation (mooring) licences will be taxable to the extent that they are not GST-free or input taxed.

However, Chapter 4 of the GST Act contains special GST rules that apply in particular circumstances. The special rules modify the application of the basic GST rules. Rules in Division 81 of the GST Act provide that certain payments to Australian government agencies are not the provision of consideration. The application of this Division must be considered in your circumstances.

When the GST was introduced the Commonwealth, states and territories agreed that the GST would apply to the commercial activities of government at all levels, but that the non-commercial activities of government would be outside the scope of the GST. Division 81 of the GST Act gives effect to this agreement.

Section 81-10 of the GST Act considers the effect of payment of certain Australian fees and charges.

Subsection 81-10(4) of the GST Act considers that a payment is not the provision of consideration to the extent that the fee or charge relates to, or relates to an application for, the provision, retention, or amendment, under an Australian law, of a permission, exemption, authority or licence (however described). We consider that your circumstances may involve fees or charges for a permission, authority or licence.

However, section 81-10(2) of the GST act also provides that a payment you make, or a discharging of your 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 regulations. Regulations for this purpose have been made at regulation 81-10.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST regulations, regulations).

Section 81-15 must also be considered, as regulations may be made that provide that the payment of a prescribed Australian fee or charge, or an Australian fee or charge of a prescribed kind, is not the provision of consideration. Such regulations have been made at regulation 81-15.01. Where a fee or charge is covered by regulations 81-10.01 and 81-15.01 there are tie-breaker regulations at 81-15.02 that must be considered.

Australian fee or charge

As a starting point, it is necessary to determine whether the fees or charges described meet the specific requirements of an Australian fee or charge.

An Australian fee or charge is a fee or charge (however described), imposed under an Australian law and payable to an Australian government agency (section 195-1 GST Act).

An Australian law means a Commonwealth, state or territory law. Australian government agency means the Commonwealth, a state or territory, or an authority of the Commonwealth or of a state or territory (section 195-1 GST Act, as defined by reference to section 995-1, Income Tax Assessment Act 1997 (ITAA 1997)).

We consider that under this definition you are an Australian government agency. Therefore where you impose a fee under a state law and the fee is payable to you this may meet the requirements of an Australian fee or charge.

There needs to be a clear authority to impose a particular charge before it can be considered to be imposed under a state law.

Under the relevant legislation you have the authority to make regulations (consistent with the Act) in relation to any land vested in you, or over which you have control and responsibility. In particular, regulations may be made in relation to controlling and regulating the occupation of navigable waters by structures or floating objects or apparatus, vessels occupying navigable waters for purposes other than immediate journeys and the use of moorings. You also are able to make regulations controlling and regulating the use of any portion of the bed (or foreshores or shores) of any port.

A regulation may provide for the issue, making, revocation, cancellation or suspension of licences, registration certificates or permits to or with respect to persons and property and for the payment of licence, registration and permit fees. A regulation may also provide for the payment of fees for inspections and other services rendered. You also are subject to relevant regulations relating to the occupation of waters.

Application of Division 81

Subsection 81-10(1) of the GST Act must be read subject to subsection 81-10(2). That is, even if an Australian fee or charge is of a kind covered by subsection (4) (that relates to permissions, authorities, licences), if it is a fee or charge of the type prescribed in the regulations it will be treated as consideration.

Regulation 81-10.01 specifies fees and charges which constitute consideration. Of relevance is sub-regulation (1)(c). This provides that a fee for hire, use of, or entry to a facility, except for an entry fee to a national park, is a fee or charge which constitutes consideration.

We consider that your occupation (mooring) fee is a fee or charge for use of a facility.

A facility is defined by the Macquarie Dictionary as including the following:

1. something that makes possible the easier performance of any action; advantage: transport facilities; to afford someone every facility for doing something.

9. a building or complex of buildings, designed for a specific purpose, as for the holding of sporting contests.

We consider that enabling the use of the submerged land, for the specific purpose of attaching a mooring, will result in 'mooring facilities'. In particular, it enables the licensee to install an apparatus on your submerged land and to use that apparatus. If a suitable mooring already exists the licence enables use of that mooring or facility.

We consider that both of these scenarios satisfy the meaning of a fee for hire or use of a facility. The purpose of the use of the land is always for the licensee to use mooring facilities. Even if the mooring equipment is not already in place, the fee allows the ability to use the land and the use of that additional (mooring) facility which will be installed. That is, the licensee pays the amount to you to enable them to use a mooring installed on your land. Your land, and the mooring placed thereon, constitutes a facility. The fee or charge is for use of this facility.

The view that the land itself, when licensed for this purpose, may constitute a facility is supported by a 'national park' being considered to be a facility. The regulations consider that a fee for hire, use of, or entry to a facility will constitute consideration, except for an entry fee to a national park. This implies that a national park is considered to be a facility. A national park is land that may or may not have additional buildings, structures, services etc. Therefore we consider that whether or not additional amenities (for example a mooring) are already in place does not alter whether your fee is for use of a facility (as considered by sub-regulation 81-10.01(1)(c)).

We also note that some of the fees you charge (for example the annual fee for private and commercial licences) vary depending on the vessel length and the site of the mooring. This indicates that the fees are based on the use of particular locations and amounts of submerged land or surface area used. This indicates that the fees are for the use of that land and facility, rather than being a merely regulatory, universal charge.

The fact that your licences are referred to as 'occupation licences' also indicates that the licences (and associated fees or charges) relate to possession, or occupation, of a place. This is confirmed by the definition in your regulations that "occupation licence" means a licence issued for the occupation of a specified locality in navigable waters by any floating object, apparatus or vessel of a specified class.

We also note that an individual attempting to sell or advertise their mooring licence themselves for money or other benefit, or attempt to privately transfer may be subject to termination of their licence. We consider that the licence to use the moorings gives rights equivalent to, or relating to, property rights. Only you may give these rights and receive monetary benefit from them. We consider that fees for property rights and similar are not generally the types of fees or charges that are considered to be exempted from GST under Division 81.

Therefore, for the reasons above, we consider that your fees are for the use of a facility. They are therefore fees or charges which constitute consideration under regulation 81-10.01.

We acknowledge that the fees relate to permissions or licences. We also acknowledge that the fees may be of a regulatory nature. However, even if we accept or assume that these fees have a regulatory purpose and therefore satisfy sub-regulation 81-15.01(1)(f) (which provides that a fee or charge for a supply of a regulatory nature made by an Australian government agency does not constitute consideration), the impact of regulation 81-15.02 must be considered.

In particular, under sub-regulation 81-15.02(2) the payment of a fee or charge covered by both paragraph 81-10.01(1)(a), (b), (c), (d), (e), (f) or (h) and regulation 81-15.01 is to be treated as the provision of consideration. That is, if a fee is for use of a facility, but this fee is also regulatory, under the requirements of the regulations this must be treated as the provision of consideration.

Therefore the fees are consideration for taxable supplies that you make.

We consider that this reasoning applies to fees such as annual fees, transfer fees, substitute vessel fees, temporary visitor use fees and relocation fees.

Fees for services or actions that you undertake, such as inspection fees, special attendance fees, and fees for the recoupment of costs associated with the removal of moorings are also consideration for additional services in relation to the use of the facility. While they too may also have a regulatory purpose, they are in connection with the (appropriate) use of a facility, fees for which constitutes consideration under Division 81. Therefore they are also fees for the use of that facility and are also subject to GST.

Similarly, your administrative fees such as duplicate licence fees and reinstatement of licence fees are also related to or in connection with the use of the facility and are not exempt from being subject to GST.

Conclusion

Your fees or charges are not exempted from being consideration by Division 81 of the GST Act. Payment of the fees is therefore the provision of consideration for supplies that you make for the purposes of section 9-5 of the GST Act. Where you make a supply for consideration, in the course of your enterprise, the supply is connected with Australia, you are registered for GST and the supply is not GST-free or input taxed you make a taxable supply.

As all the requirements of section 9-5 of the GST Act apply, and there is nothing to make the supply GST-free or input taxed, your supplies are taxable supplies.

Under section 9-40 of the GST Act you must remit the GST payable on the taxable supplies that you make.

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