Edited version of your written advice

Authorisation Number: 1051247237859

Date of advice: 4 December 2017

Ruling

Subject: Application of GST to Fees

Question

Are the Fees listed in the tables below consideration for a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

The following tables set out the GST treatment of the Fees. When we indicate that a Fee is taxable under section 9-5 of the GST Act, it means that the supply meets all of the requirements of section 9-5. If a Fee is not consideration for a supply by virtue of Division 81 of the GST Act, it is referred to as being not subject to GST.

Relevant facts and circumstances

1. You charge the Fees.

2. You have provided relevant information about your entity’s operations.

3. You have provided relevant legislation and regulations governing the Fees.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 7-1

Section 9-5

Section 81-10

Section 81-15

Section 195-1

A New Tax System (Goods and Services Tax) Regulations 1999

Regulation 81-15.01

Income Tax Assessment Act 1997

Section 50-1

Section 50-25

Section 995-1

Reasons for decision

Unless otherwise stated, all legislative references in this ruling are to the GST Act.

Under section 7-1, GST is payable on taxable supplies. Under section 9-5, you make a taxable supply if:

● you make a supply for consideration

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

● the supply is connected with the indirect tax zone, 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.

Under section 9-5 one of the requirements for making a taxable supply is that you make a supply for consideration.

However, special rules in Division 81 apply to the payment (or the discharging of the liability to make a payment) of Australian fees or charges, to an Australian government agency by an entity which is liable for the fee or charge under the provisions of the applicable Australian law. The payment of fees or charges to which Division 81 applies is treated as not being the provision of consideration and is not subject to GST.

In particular, under subsection 81-10(1) an Australian fee or charge is not the provision of consideration if it is a fee or charge covered by subsection 81-10(4). Further, section 81-15 states that the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) may provide that the payment of a prescribed Australian fee or charge, or of an Australian fee or charge of a prescribed kind, or the discharging of a liability to make such a payment, is not the provision of consideration.

Australian fee or charge is defined in section 195-1 to mean a fee or charge (however described), other than an Australian tax, imposed under an Australian law and payable to an Australian government agency. Therefore, for the fees and charges listed in the tables to not be consideration for a supply they must be:

1. imposed under an Australian law

2. payable to an Australian government agency

3. covered by subsection 81-10(4) or of a kind prescribed by the GST Regulations.

1. Are the fees and charges imposed under an Australian law?

Australian law is defined in section 195-1 to have the meaning given by section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997). Section 995-1 of the ITAA 1997 provides an Australian law means a Commonwealth law, a State law or a Territory law.

The Fees are imposed under an Australian law.

2. Are the fees and charges payable to an ‘Australian government agency’?

Australian government agency is defined in section 195-1 to have the meaning given by section 995-1 of the ITAA 1997. Australian government agency means:

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

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

The term ‘an authority of the Commonwealth, a State or a Territory’ is not defined in either the GST Act or the ITAA 1997. A number of decided cases have considered the meaning of 'authority of a State' and 'authority'.

In Committee of Direction of Fruit Marketing v. Australian Postal Commission (1980) 144 CLR 577 (the Fruit Marketing case) the High Court unanimously decided that the Committee of Direction of Fruit Marketing was an authority of the State of Queensland for the purposes of the Postal Services Act 1975. Gibbs J stated at 580:

The expression "authority of a State" refers to a body which exercises power derived from or delegated by the State, but the fact that a body is established under State law and possesses power conferred upon it by State law will not necessarily mean that the body is an authority of a State...The words "authority of a State" naturally mean a body which is given by the State the power to direct or control the affairs of others on behalf of the State - ie, for the purposes of and in the interests of the community or some section of it. In some cases it may be decisive that the body concerned is given exceptional powers of a kind not ordinarily possessed by an individual or a company, and that those powers are intended to be exercised for a purpose that would ordinarily be regarded as a purpose of government. On the other hand, in some cases it may be decisive that the body is conducted in the interest, and for the profit, of its members. In all cases, however, it is necessary to have regard to all the relevant circumstances in order to determine the character of the body in question.

In FC of T v. Bank of Western Australia Ltd ; FC of T v. State Bank of New South Wales Ltd 96 ATC 4009; (1995) 133 ALR 599 the meaning of the word 'authority' was considered by the Full Federal Court in the context of the phrase 'the official use,... and not for sale by,... an authority which is completely controlled by,... a State' in the Sales Tax (Exemptions and Classifications) Acts 1935 and 1992. In that case Hill J looked at a number of Australian cases as to the meaning of the word 'authority'. He derived the following propositions from those cases:

● A question whether a particular entity is an authority will be a question of fact and degree dependent upon all the circumstances of the case: The Western Australian Turf Club v. FC of T 78 ATC 4133; (1978) 139 CLR 288 (Western Australian Turf Club) per Stephen J with whom Barwick CJ agreed at ATC 4134; CLR 290. No one factor will be determinative, rather there will be a 'range of considerations': the Fruit Marketing case at 580.

● A private body, corporate or unincorporated, established for profit will not be an authority: Renmark Hotel Inc v. FC of T (1949) 8 ATD 424; (1949) 79 CLR 10 (Renmark Hotel) per Rich J at ATD 429; CLR 17, FC of T v. Silverton Tramways Co Ltd (1953) 10 ATD 295; (1953) 88 CLR 559 ( Silverton Tramways ) per Dixon CJ at ATD 297; CLR 566.

● Incorporation by legislation is not necessary before a body may be classified as an authority: Renmark Hotel per Rich J at ATD 430; CLR 19, Western Australian Turf Club at ATC 4135; CLR 293.

● For a body to be an authority of a State or of the Commonwealth, the body in question must be an agency or instrument of government set up to exercise control or execute a function in the public interest. It must be an instrument of government existing to achieve a government purpose: the Fruit Marketing case.

● The body in question must perform a traditional or inalienable function of government and have governmental authority for so doing: Renmark Hotel per Rich J at ATD 428; CLR 16, General Steel Industries Inc v. Commissioner for Railways (NSW) (1964) 112 CLR 125 per Barwick CJ at 134, Re Anti-Cancer Council of Victoria ; Ex parte the State Public Services Federation (1992) 175 CLR 442 per Mason CJ, Brennan and Gaudron JJ at 450-451.

● It is not necessary for a person or body to be an authority that he, she or it have coercive powers, whether of an administrative or legislative character: Renmark Hotel per Rich J at ATD 430; CLR 18. Conversely the fact that a person or body has statutory duties or powers will not of itself suffice to characterise that person or body as an authority: Western Australian Turf Club per Stephen J at ATC 4137; CLR 297.

● At least where the question is whether a body is a 'public authority' the body must exercise control power or command for the public advantage or execute a function in the public interest: Silverton Tramways per Dixon CJ at ATD 297 and 298; CLR 565 and 567. The central concept is the ability to exercise power or command: the Fruit Marketing case per Gibbs J at 580.

Therefore, it is considered that you are an ‘authority of the Commonwealth, a State or a Territory’ and are an Australian government agency for the purposes of Division 81.

3. Are the fees and charges covered by subsection 81-10(4) or of a kind prescribed by the GST Regulations?

Subsection 81-10(4) provides that for subsection 81-10(1) an Australian fee or charge relating to, or relating to an application for, the provision, retention, or amendment, under an Australian law, of a permission, exemption, authority or licence is covered.

Regulation 81-15.01 provides that for section 81-15 the following kinds of Australian fees and charges are prescribed:

● fee or charge imposed on an industry to finance regulatory or other government activities connected with the industry (paragraph 81-15.01(1)(c)), and

● a fee or charge to compensate an Australian government agency for costs incurred by the agency in undertaking regulatory activities (paragraph 81-15.01(1)(d)).

Where a Fee is not covered by subsection 81-10(4) or of a kind prescribed by the GST Regulations, it is consideration for a taxable supply as the supply meets all of the requirements of section 9-5.

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