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Edited version of your private ruling
Authorisation Number: 1012565294382
Ruling
Subject: Goods and Services Tax and the meaning of 'State'
Question 1
Are you a State for the purpose of the Subdivision 38-N and Division 75 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes
Relevant facts and circumstances
· Entity A was established by an Act.
· You:
o Were established through amendments to that Act.
o Are registered for GST.
o Are a body corporate.
o Have various purposes and functions.
o Are managed by a board of directors who are subject to Ministerial direction.
o Are required to carry out functions in a commercial way but may be directed by the Minister to do otherwise.
o Must obtain certain approvals from the Minister.
o Have capital.
o Have reporting requirements.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
Reasons for decision
This decision applies to the legislative provisions in the GST Act that are listed in paragraph 1 of Goods and Services Tax Ruling GSTR 2006/5 Goods and services tax: meaning of 'Commonwealth, a State or a Territory' (GSTR 2006/5).
The meaning of 'State' is not defined in Subdivision 38-N and Division 75 of the GST Act. GSTR 2006/5 discusses the meaning of 'Commonwealth, a State or a Territory' for the purposes of section 38-445 and section 75-10 of the GST Act.
A State may include a corporation; however, not every corporation in which the State has an interest is part of the State. (Paragraph 8 of GSTR 2006/5)
The fundamental principal established by case law is that if the State is carrying on the relevant business or other function through the corporation then the corporation is the State. However, if the intention is for the corporation to perform its functions independently of, and not as an instrument of the State then the corporation is not the State. (GSTR 2006/5 paragraph 11)
To assist in determining which of these characterisations apply in your case paragraph 12 of GSTR 2006/5 outlines principles to consider. The following features of your relationship with the State are considered relevant.
You:
· Are a body corporate established by statute and subject to Ministerial direction:
· Managed by a board of directors
· Have various functions:
· Have various reporting requirements:
· Are required to carry out functions in a commercial way but may be directed by the Minister to do otherwise
· Must obtain certain approvals from the Minister;
· Have capital
We consider these features support the conclusion that the State is carrying on their relevant business or other function through your corporation. Therefore you are a 'State' for the purposes of Subdivision 38-N and Division 75 of the GST Act.
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