Edited version of your written advice

Authorisation Number: 1051413823667

Date of advice: 23 August 2018

Ruling

Subject: Application of GST to Fees

Question

Are the Fees listed in the table 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 table sets 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 and is taxable to the extent it is not GST-free under subsection 9-30(1) of the GST Act (and Division 38 of the GST Act). 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

You charge the Fees.

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

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

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

A New Tax System (Goods and Services Tax) Act 1999 subsection 9-30(1)

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

A New Tax System (Goods and Services Tax) Act 1999 Subdivision 38-I

A New Tax System (Goods and Services Tax) Act 1999 section 38-285

A New Tax System (Goods and Services Tax) Act 1999 section 38-290

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

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(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 195-1

Income Tax Assessment Act 1997 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.

Division 81

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) relating to, or relating to an application for, the provision, retention, or amendment, under an Australian law, of a permission, exemption, authority or licence

● subsection 81-10(5) relating to recording, copying, modifying, allowing access to, receiving, processing or searching for information.

The term ‘Australian fee or charge’ is defined in section 195-1 of the GST Act as:

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 term ‘Australian law’ is defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) and includes a State law. It includes acts and law making powers which are delegated by parliaments such as regulations. Therefore, the law under which fees are payable to you is an Australian law.

The term ‘Australian government agency’ is defined in section 995-1 of the ITAA 1997 and means:

● the Commonwealth, a State or Territory; or

● an authority of the Commonwealth or of a State or a Territory.

For the purposes of this Ruling, it is accepted that you come within the definition of an Australian government agency.

Where the fees and charges are not covered by subsection 81-10(4) or (5), they are consideration for a taxable supply (as the supply meets all of the requirements of section 9-5) to the extent they are not GST-free.

GST-free supplies

Subsection 9-30(1) provides that a supply is GST-free if it is GST-free under Division 38. Subdivision 38-I deals with the GST-free treatment of a supply of water (section 38-285) and sewerage or sewerage like-services (section 38-290). A supply of a right to receive a GST-free supply of either of the abovementioned things is also GST-free under paragraph 9-30(1)(b).

GSTR 2000/25 explains what activities covered by the relevant supplies are GST-free.

In relation to water, paragraph 24 of GSTR 2000/25 explains that the following supplies related to water will be GST-free:

● initial connection, re-connection, disconnection, water meter installation, and tapping and tee insertion

● irrigation channel water scheduling and channel attendance (including channelling from natural water courses)

● irrigation channel maintenance up to and including the point of supply (where it is charged to the water supply recipient), and

● water meter reading and testing.

Some activities performed may have some connection with a supply of water, but remain separate supplies. These separate supplies include, information, such as plans of water pipe locations, granting approvals for building or development as part of a supplier’s statutory duties, and issuing permits. These supplies are not GST-free supplies of water. However, some fees and charges imposed for these supplies may be exempt under Division 81. A supply that enables an end recipient to use, store or treat water, once it has been supplied, is also not a supply of water and therefore not GST-free.

In relation to sewerage and sewerage-like services, subsection 38-290(1) provides that ‘a supply of sewerage services is GST-free. Subsection 38-290(2) further provides that a supply that consists of removing waste matter from residential premises is GST-free if:

● the premises are not serviced by sewers; and

● the waste matter is of a kind that would normally be removed using sewers if the premises were serviced by sewers.

GSTR 2000/25 also explains that charges for sewerage services are often calculated independently of actual use. A charge for the right to use a sewerage service, or a right to discharge waste water, is GST-free.

A range of other goods and services may also be supplied. It may be said that these supplies are connected with the business of the supply of sewerage services but they are not in themselves sewerage services. The sale of plans of sewer pipe locations and administrative services for photocopying are examples of such supplies that are not GST-free. However, some fees and charges imposed for these supplies may be exempt under Division 81.

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