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Ruling

Subject: Goods and services tax (GST) and taxes, fees and charges

Question

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

Answer

Yes - in part. The payments of some of the specified fees or charges are excluded from GST under Division 81 of the GST Act.

However, the payments of some of the specified fees or charges will attract GST under Division 81 of the GST Act.

One specified fee is not captured under Division 81 of the GST Act as it does not meet the definition of an Australian fee or charge.

Relevant facts and circumstances

You are a government entity and are registered for GST.

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

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 section 9-10,

A New Tax System (Goods and Services Tax) Act 1999 section 9-15,

A New Tax System (Goods and Services Tax) Act 1999 section 9-39,

A New Tax System (Goods and Services Tax) Act 1999 Division 38,

A New Tax System (Goods and Services Tax) Act 1999 Division 40,

A New Tax System (Goods and Services Tax) Act 1999 Division 81,

A New Tax System (Goods and Services Tax) Act 1999 section 81-5,

A New Tax System (Goods and Services Tax) Act 1999 subsection 81-10(1),

A New Tax System (Goods and Services Tax) Act 1999 subsection 81-10(2),

A New Tax System (Goods and Services Tax) Act 1999 subsection 81-10(3),

A New Tax System (Goods and Services Tax) Act 1999 subsection 81-10(4),

A New Tax System (Goods and Services Tax) Act 1999 subsection 81-10(5),

A New Tax System (Goods and Services Tax) Act 1999 section 81-15,

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

A New Tax System (Goods and Services Tax) Regulations 1999 regulation 81-10.01,

A New Tax System (Goods and Services Tax) Regulations 1999 regulation 81-10.01(1)(h),

A New Tax System (Goods and Services Tax) Regulations 1999 regulation 81-15.01,

A New Tax System (Goods and Services Tax) Regulations 1999 regulation 81-15.01(1)(e),

A New Tax System (Goods and Services Tax) Regulations 1999 regulation 81-10.01(1)(f) and

Income Tax Assessment Act 1997 section 995-1.

Reasons for decision

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable supply if:

· you make the supply for consideration

· the supply is made in the course or furtherance of an enterprise that you carry on

· the supply is connected with Australia, and

· 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.

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:

· any payment, or any act or forbearance, in connection with a supply of anything

· any payment, or any act or forbearance, in response to or for the inducement of a supply of anything.

The circumstances in which a supply is GST-free or input taxed are explained 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.

Taxes, fees and charges

Prior to 1 July 2011 the payment of Australian taxes, fees or charges were treated as consideration for a supply, except to the extent that the Australian tax, fee or charge was listed in the 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 or charges listed in the Treasurer's Determination as at 30 June 2011 remain exempt where they are imposed before 1 July 2013.

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.

The terms 'Australian tax' and 'Australian fee or charge' are defined in section 195-1 of the GST Act as:

· Australian tax means a tax (however described) imposed under an Australian law.

· 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.

The terms 'Australian government agency' and 'Australian law' are defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as:

Australian law means a Commonwealth law, a State law or a Territory law.

Australian government agency means:

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

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

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 prescribed by the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations). Pursuant to subsection 81-10(3) of the GST Act, 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.

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

Subsection 81-10(5) of the GST Act applies to fees or charges mainly relating to information and record keeping. A payment is not the provision of consideration to the extent that the fee or charge is paid to an Australian government agency and relates to the agency recording, copying, modifying, allowing access to, receiving, processing or searching for information.

Are the items listed in the table an Australian tax, fee or charge?

An Australian tax is a tax (however described) imposed under a Commonwealth law, a State law or a Territory law.

Paragraph 4.22 of the Explanatory Memorandum to the Tax Laws Amendment (2011 Measures No.2) Act 2011 provides the following examples of Australian taxes imposed under an Australian law: income tax, stamp duty, fringe benefits tax, payroll tax, the Medicare Levy, local government 'ordinary rates' and various industry levies.

The fees specified are not considered to be an Australian Tax.

The government entities satisfy the definition of Australian government agency in section 995-1 of the ITAA 1997. Also, the fees or charges, apart from one specified, are imposed under an Australian law and are payable to an Australian government agency. As such, the fees or charges, apart from one specified, are Australian fees or charges.

However, we will consider whether subsections 81-10(4) or 81-10(5) of the GST Act apply to the listed fees or charges.

Permission, exemption, authority or license

Subsection 81-10(4) of the GST Act covers a fee or charge that relates to, or relates to an application for the provision, retention or amendment of a permission, exemption, authority or licence (however described).

Paragraph 4.27 of the Explanatory Memorandum to the Tax Laws Amendment (2011 Measures No.2) Act 2011 provides examples of fees or charges that are covered by subsection 81-10(4) of the GST Act. In summary, the examples in paragraph 4.27 include application fees, licences, permits and certifications that are required by government prior to undertaking an occupation and regulatory charges imposed to undertake an activity.

We consider that the some of the specified fees relate to, or relate to an application for the provision, retention or amendment of a permission or licence (however described).

You require the payment of these fees in relation to applications for the provision of permissions which allow particular activities.

On this basis, the fees or charges listed specified are covered by subsection 81-10(4) of the GST Act.

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 regulation 81-10.01 of the GST Regulations as the provision of consideration for a supply.

Regulation 81-10.01 of the GST Regulations makes fees or charges that would otherwise be exempt from GST under the operation of subsections 81-10(4) and (5) of the GST Act, potentially made for consideration and may give rise to taxable supplies.

We consider that the fees or charges prescribed in regulation 81-10.01 of the GST Regulations do not apply to the specified fees or charges.

Therefore, subsection 81-10(2) of the GST Act does not apply to treat these fees as the provision of consideration and the fees do not give rise to taxable supplies.

Information and record-keeping

Subsection 81-10(5) of the GST Act applies to fees or charges relating to information and record keeping. A payment is not the provision of consideration to the extent that the fee or charge is paid to an Australian government agency and relates to the agency recording, copying, modifying, allowing access to, receiving, processing or searching for information.

We consider that the specified fees relate to recording, copying, modifying, allowing access to, receiving, processing, and searching for information.

The fees payable are covered by 81-10(5) of the GST Act.

The fee payable is covered by 81-10(5) of the GST Act as the fee is paid in order for the government department to record, receive, process and record information.

Further, we consider that subsection 81-10(2) of the GST Act does not apply because this fee or charge is not prescribed in GST Regulation 81-10.01.

As such payment of the fees or charges specified is not treated as the provision of consideration and will not give rise to taxable supplies.

The fee payable is covered by subsection 81-10(5) of the GST Act as this fee is paid in order for the government agency to record the information.

Further, we consider that subsection 81-10(2) of the GST Act does not apply because this fee or charge is not prescribed in GST Regulation 81-10.01.

As such the fees or charges specified are not treated as the provision of consideration and will not give rise to taxable supplies.

Fees and charges that constitute consideration

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 regulation 81-10.01 of the GST Regulations as the provision of consideration for a supply.

Regulation 81-10.01 of the GST Regulations makes fees or charges that would otherwise be exempt from GST under the operation of subsections 81-10(4) and (5) of the GST Act, potentially made for consideration and may give rise to taxable supplies.

We consider that the fees specified constitute consideration.

Paragraph 81-10.01(1)(h) of the GST Regulations provides that a fee or charge will be consideration where a fee or charge for a supply by an Australian government agency, may also be provided by a supplier that is not an Australian government agency.

The Explanatory Statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No.2) discusses paragraph 81-10.01(1)(h) of the GST Regulations and states:

This paragraph ensures that the regulatory activities of government made in competition with the private sector are subject to GST where the other requirements of section 9-5 of the Act are satisfied.

Fees and charges in this category are not excluded from being consideration for a taxable supply. This is consistent with the National Competition and Consumer Policy guidelines and ensures that a government entity is not given a competitive advantage over a private sector supplier making the same type of supply.

This covers situations in which government agencies have authorised private agencies to perform activities that form part of a regulatory process, for example, certification activities which are required for a regulatory process to be followed. Where government agencies, as well as government certifiers, have authorised private certifiers to perform certification activities these fees and charges will continue to be consideration for a supply that is subject to GST. This ensures competitive neutrality between supplies made by government and non-government agencies.

This paragraph applies only where a government agency is providing a supply in a competitive market, or where private suppliers have been accredited or authorised to make a supply over which the agency would otherwise have a monopoly.

The fees are covered by paragraph 81-10.01(1)(h) of the GST Regulations. This is because it is capable of being conducted by a supplier that is not an Australian government agency.

As such, these fees will be consideration for the supply and GST will be payable where all the requirements of section 9-5 of the GST Act are satisfied.

However, the fees are not covered by paragraph 81-10.01(1)(h) of the GST Regulations where they are not capable of being conducted by a supplier that is not an Australian Government agency.

As such, payment of these fees are covered by subsection 81-10(4) of the GST Act, are not treated as the provision of consideration and will not give rise to taxable supplies.

Fees and charges that do no constitute consideration

Section 81-15 of the GST Act provides that the GST Regulations may prescribe that the payment of an Australian fee or charge is not the provision of consideration.

Regulation 81-15.01 of the GST Regulations prescribes fees and charges for the purposes of section 81-15 of the GST Act. This regulation adds to the kinds of fees and charges that are already made exempt from GST under subsections 81-10(4) and (5) of the GST Act.

We consider that the specified fees do not constitute consideration.

Court, tribunal, commission of inquiry or Sheriff's office

Paragraph 81-15.01(1)(e) of the GST Regulations provides that payment of a fee or charge will not be consideration where the fee or charge is imposed in relation to a court, tribunal, commission of inquiry or Sheriff's office.

The Explanatory Statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No.2) discusses paragraph 81-15.01(1)(e) of the GST Regulations and states:

This paragraph ensures that fees and charges imposed in relation to courts, tribunals, commissions of inquiry and Sherriff's offices are not treated as the provision of consideration, and therefore do not give rise to taxable supplies. These are fees and charges associated with the right to access the legal system and with the enforcement of court decisions, which is important to the integrity of the justice system.

Examples of Australian fees and charges that fall within this paragraph include, but are not limited to:

· Fees charged by a Sheriff's Office related to serving and executing documents and writs;

· Court and Tribunal related infringement fees and charges; and

· Court and Tribunal filing and hearing fees and charges.

This fee is captured by paragraph 81-15.01(1)(e) of the GST .

As such, these fees will not be treated as the provision of consideration and therefore will not give rise to taxable supplies.

These fees are captured by paragraph 81-15.01(1)(e) of the GST Regulations. As such, these fees will not be treated as the provision of consideration and will not give rise to taxable supplies.

Regulatory nature made by an Australian government agency

Paragraph 81-15.01(f) of the GST Regulations provides that a fee or charge will not be consideration where the fee or charge is of a regulatory nature made by an Australian government agency.

The Explanatory Statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No.2) discusses paragraph 81-15.01(1)(f) of the GST Regulations and states:

This paragraph ensures that fee or charges that relate to activities of government that are regulatory in nature are not treated as the provision of consideration and therefore do not give rise to taxable supplies.

…

Note: some fees and charges covered by this paragraph may also be covered by other regulations made for section 81-15 of the Act, or by subsections 81-10(4) or (5) of the Act.

These fees are captured by paragraph 81-15.01(1)(f) of the GST Regulations. These fees may be captured by subsections 81-10(4) or (5) of the GST Act, however, in this instance it is not clear that these fees are captured. Paragraph 81-15.01(1)(f) of the GST Regulations ensures that these regulatory activities of government do not give rise to taxable supplies.

Other

This fee is paid to an Australian government agency but it is not imposed under an Australian law. As such, the fee does not meet the definition of an Australian fee or charge under section 195-1 of the GST Act and is not captured under Division 81 of the GST Act.

Conclusion

The payments for supplies that are specified are covered by subsections 81-10(4) or 81-10(5) of the GST Act. Accordingly, subsection 81-10(1) of the GST Act applies to treat these payments as not the provision of consideration. Therefore, the payments of these fees will be excluded from GST under Division 81 of the GST Act.

The payments for supplies specified are covered by subsection 81-15.01(1) of the GST Regulations. Accordingly section 81-15 of the GST Act applies to treat these payments as not constituting consideration. Therefore, the payments of these fees will be excluded from GST under Division 81 of the GST Act.

As the payment of these fees are not consideration for a supply, the supplies for these payments will not be a taxable supply because section 9-5 of the GST Act requires that the 'supply is for consideration'. Accordingly, GST does not apply to these fees or charges. Therefore, the payments of these fees will be excluded from GST under Division 81 of the GST Act.

However, the payments for supplies specified are covered by section 81-10.01 of the GST Regulations. Accordingly subsections 81-10(2) and (3) of the GST Act applies to treat these payments as consideration and GST will be payable where all the requirements of section 9-5 of the GST Act are satisfied. Therefore, the payments of these fees will not be excluded from GST under Division 81 of the GST Act.

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