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Edited version of your written advice
Authorisation Number: 1012741704667
Ruling
Subject: GST and levy
Question 1
Will the Levy imposed by the Participating Members upon its customers be subject to goods and services tax (GST)?
Answer
Yes
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
• You are registered for GST.
• You are proposing an arrangement where you intend to establish a new non-profit company (PA) limited by guarantee.
• The proposed arrangement will be between PA and Participating Members pursuant to an agreement.
• Under the agreement:
• PA will implement a Scheme across Australia over a 5 year period. (the PA Program).
• The intention of the PA Program is to better manage the collection treatment and disposal of certain products. The specific objectives of the PA Program are set out in a specific clause of the agreement.
• The Participating Members will fund the Objectives through the imposition of a Levy upon its customers. The Levy will be calculated as xx cents per litre of a product supplied by the Participating Members to its customers by retail or trade;
• Each Participating Members will notify PA, at the end of each calendar quarter, of the volume by litres of the product in *Containers supplied by retail and trade purposes to all customers in Australia.
• With this information, PA will issue an invoice to each Participating Members with their Levy Contribution for that quarter. Each Participating Member will be required to pay its Levy Contribution to PA no later than 14 days after the date of the invoice;
• Where the Levy Contribution collected during a 12 month term of the PA Program exceeds the cost of the Objectives for that period, PA will retain any surplus funds in; and
• The Levy Contribution from each Participating Member will only be used for the Objectives contained in the agreement.
Note * Containers are defined in the Agreement to mean all containers 1 litre and over and up to and including 20 litres but excluding all aerosol containers.
Relevant legislative provisions
All references are to the A New Tax System (Goods and Services Tax) Act 1999:
Section 9-5
Section 9-10
Reasons for decision
Question
Summary
Where PA is registered or required to be registered for GST, the levy will be a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
Detailed reasoning
Section 9-5 of the GST Act states that if a supply is (a) for consideration, (b) in the course or furtherance of an enterprise, (c) connected with Australia, and (d) the entity is registered or required to be registered, the supply is a taxable supply. Input taxed supplies and GST-free supplies are not taxable supplies.
The meaning of 'supply' is given in section 9-10 of the GST Act. It states:
(1) A supply is any form of supply whatsoever.
(2) Without limiting subsection (1), supply includes any of these:
(a) a supply of goods;
(b) …(f);
(g) an entry into, or release from, an obligation:
i. to do anything; or
ii. to refrain from an act; or
iii. to tolerate an act or situation;
(h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g).
The supply that needs to be considered is the payment of the Levy (paid by the Participating Member's customers) to PA.
We consider that based on the facts provided PA is making a supply to the Participating Members (being the entry by PA into the obligations set out in the agreement) and that the Levy is consideration for that supply.
This is supported by the fact that, the agreement includes relevant clauses that bind the parties to certain objectives and obligations.
Assuming that PA will be registered or required to be registered for GST purposes, we consider that the Levy Contribution will be consideration for a taxable supply made by PA to the Participating Members. This means that, in our view, the levy will be subject to GST.
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