Edited version of your private ruling

Authorisation Number: 1012560608953

Ruling

Subject:

Question 1

Are the following six cemetery fees and charges outside the scope of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

· Issue a Right of Interment

· Memorialisation permits and approvals

· Permits

· Miscellaneous fees and charges

· Interments

· Cremations

Answer

No. All six fees and charges are within the scope of the GST Act.

The following fees and charges, as described, are taxable supplies under the GST Act:

· Issue a Right of Interment

· Interments

· Cremations

The following fees and charges, as described, are exempt from GST under the GST Act:

· Memorialisation permits and approvals

· Permits

· Miscellaneous fees and charges (relating to recording, copying, modifying, allowing access to, receiving, processing or searching for information)

Please see the reasons for decision in relation to "Miscellaneous fees and charges".

Relevant facts and circumstances

You are authorised to seek a ruling on behalf of other entities.

All the relevant entities are registered for GST.

A section of an Act authorises entities to fix fees and charges.

Pursuant to another section of the same Act, the Secretary approves these fees and charges.

The relevant fees and charges are as follows:

The following fees and charges are listed in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 1):

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 9-15

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

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) Regulations 1999

Income Tax Assessment Act 1997 Division 995

A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 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. We do not consider that Divisions 38 and 40 are applicable.

However, 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 or 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 Service 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 or charges listed in the Treasurer's Determination as at 30 June 2011 remained exempt where they were imposed before 1 July 2013. This is the case because of the grandfathering rules. Therefore, the following fees or charges remain exempt from GST where they were imposed before 1 July 2013 as a consequence of the grandfathering rules and the fact that they were specifically listed in the Treasurer's Determination:

· Issue a Right of Interment

· Memorialisation permits and approvals

· Permits

· Miscellaneous fees and charges

From 1 July 2013 for Division 81 of the GST Act to apply to the six fees and charges listed, they have to be payable to an 'Australian government agency'. We need to consider if the entities are Australian government agencies for the purposes of Division 81 of the GST Act.

Division 995 of the Income Tax Assessment Act 1997 defines Australian government agency as:

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

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

Therefore, to be an Australian government agency an entity must be the Commonwealth, a State or a Territory or an authority of the Commonwealth, a State or Territory.

The term 'authority of the State' is not a defined term under the GST Act or any other act. However, there are a number of cases¹ that provide guidance on a range of factors to be considered. These include:

· exercising control or executing a function in the public interest. It must be an instrument of government existing to achieve a government purpose

· performing traditional or inalienable functions of government and having government authority for so doing

· exercising control, power or command for the public advantage or execute a function in the public interest.

The entities have been created by an Act and are regulated and controlled under that Act by you.

Guidance on what is an Australian government agency is also provided in the publication Payments to government agencies under Division 81 available on the ATO website ato.gov.au. Each of the following is an Australian government agency:

· the Commonwealth, a state or a territory

· a Commonwealth, state or territory government department

· a body (whether or not it is an entity) established by the Commonwealth, a state or a territory to carry on activities

· a body (whether or not it is an entity) established for a public purpose by an Australian law

· a local governing body established by a state or territory law (such as a local municipal council).

Based on the above factors, we consider that you and the entities that you represent in this ruling are Australian government agencies for the purposes of the GST Act.

We will now consider the six fees and charges listed to determine whether their payment is the provision of consideration in light of Division 81 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 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.

Exempt Fees or Charges

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).

From the information supplied, we consider that the following fees or charges fall under subsection 81-10(4) of the GST Act and consequently are exempt from GST under subsection 81-10(1) of the GST Act as the fees or charges relate to various permissions under an Act:

Miscellaneous Fees and Charges

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.

From the information supplied, we consider that the following fee or charge falls under paragraph (g) of subsection 81-10(5) of the GST Act where the entities are recording, copying, modifying, allowing access to, receiving, processing or searching for information, and is therefore is exempt from GST under subsection 81-10(1) of the GST Act:

Please note that where the entities are not doing any of the things covered by subsection 81-10(5) of the GST Act, then the fee or charge is not exempt from GST under this subsection.

Taxable Supplies

If a fee or charge is covered by both regulations 81-10.01 and 81-15.01 of the GST Regulations, regulation 81-15.02 of the GST Regulations determines which regulation would prevail.

Sub-regulation 81-15.02(3) of the GST Regulations provides that where a fee or charge is covered by both regulations 81-10.01 and 81-15.01 and was imposed on or after 1 July 2013, then the fee or charge is to be treated as the provision of consideration.

Therefore, following fees and charges are taxable supplies under the GST Act from 1 July 2013 as they satisfy section 9-5 of the GST Act. The fees or charges are treated as the provision of consideration under subsection 81-10(2) of the GST Act by virtue of paragraph 81-10.01(1)(g) of the GST Regulations being for supplies of a non-regulatory nature:

The above views on the particular fees or charges as listed in this ruling are consistent with the views expressed in Class Ruling CR 2013/25 Goods and services tax: the GST treatment of fees and charges imposed by NSW councils in relation to cemeteries, facilities, leases, legal services, libraries and sales (CR 2013/25). In CR 2013/25 a number of fees and charges, similar to those covered in this ruling, were considered as to whether they were regarded as consideration or not consideration for the purposes of Division 81 of the GST Act.

Further Information

Further information in relation to the way we treat payments to government agencies under Division 81 of the GST Act is available on the ato.gov.au website: (http://www.ato.gov.au/Business/GST/In-detail/Non-profit-and-government-organisations/Government-organisations/Payments-to-government-agencies-under-Division-81/).

This website page covers:

· Introduction: Changes to Division 81

· Operation of Division 81: From 1 July 2011 until 30 June 2012; From 1 July 2012 until 30 June 2013; From 1 July 2013

· How to self-assess if GST applies to a tax, fee or charge: Australian tax; Australian government agency; Exempt under the GST Act; Not exempt under the GST regulations; Exempt under the GST regulations; Fees or charges covered by both an exempt regulation and a non-exempt regulation

· If you make an error

Questions and answers

More information

Practice Statement Law Administration (General Administration) PS LA 2013/2 outlines the ATO administrative approach regarding the GST treatment of Australian fees or charges under Division 81 of the GST Act where Australian government agencies determine the GST classification of supplies they make, and is available at: http://atolaw/pdf/psr/ga2013-002.pdf

¹ See for example ATO ID 2012/94 which considers 'authority of the State' in a Fringe Benefits Tax context.

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