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Ruling

Subject: GST and additional fee on services provided at a government office

Question 1

Does Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) apply to exclude from goods and services tax (GST) an additional fee imposed for services provided at a government office?

Answer

The additional fee will also be excluded from GST where the payment for the underlying supply is excluded from GST.

Relevant facts and circumstances

Relevant legislative provisions

Section 9-5

Section 9-15

Division 81

Reasons for decision

Question 1

Summary

The additional fee constitutes a part of the consideration for the underlying supply provided at the counter. Where the payment for the underlying supply is excluded from the GST under Division 81 of the GST Act or the regulation, the additional fee is also excluded from the GST.

Detailed reasoning

The issue to be considered is whether the additional fee is consideration for a separate independent supply or is a part of the consideration for the underlying supply (the supply under the State Act).

You have advised that the purpose of the fee is to reduce the congestion at the government offices by encouraging customers to process transactions via the internet/phone when an internet/phone service is available. The fee will not apply where a visit to the government office is essential.

The counter service to a customer (in relation to the underlying supply) is incidental to the provision of the underlying supply and is a component of the delivery of the underlying supply. It is not intended to be charged or supplied separately, and is not treated/accounted for as a separate supply. Note that some services provided at the counter attract no additional fee, but administrative services are still being provided. We also note that all supplies made by you (including online or by phone) incorporate an element of administrative services, but which is not necessarily separately identified. The additional in-person fee acts as penalty/deterrent to prevent congestion at the government offices in order to reduce the waiting time.

However, even if the additional over the counter service were characterised as a separate additional supply we do not consider that the additional consideration is in connection with this counter service. Rather, the payment is in connection with the underlying supply. Despite the additional payment being described as a 'fee' it is considered that the fee should not be characterised as being consideration for some other service (administrative services), separate and distinct from the underlying service being supplied by you. A customer who makes a payment for your supplies (with or without the additional fee) under the Act is providing consideration solely for the underlying supply.

The value of taxable supplies (where GST is applicable) includes all payments which the supplier requires the customer to make as condition for receiving the supply. The fact that a customer can either transact at a government office or online/by phone (for a lower price) does not indicate that the additional administrative services are a separate supply for consideration. Rather the payment received is what is necessary for the underlying supply when it takes place in the relevant manner.

Therefore, the additional fee is not consideration for a separate supply but forms part of the consideration for the underlying supply made under the Act.

You have advised that the fees for some of the supplies made under the Act are excluded from the GST by Division 81 of the GST Act and the Regulation [subsection 81-5(2)]. Other supplies under the State Act may include fees that are not excluded from the GST [subsection 81-5(1)].

As the additional fee forms part of the consideration for your supply under the State Act, where the payment for the supply is excluded from GST, the additional fee is also excluded from the GST.

Similarly, where the payment for your supply under the State Act is not excluded from the GST, the additional fee is also not excluded from the GST. The requirements of section 9-5 of the GST should be considered to determine the GST-status of the supply under the State Act.

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