Edited version of private ruling

Authorisation Number: 1011748301707

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: GST and cash funding services

Issue 1

Question

Is the supply of ATM Cash Funding services an input taxed financial supply of an "interest in or under" a debt, credit arrangement, or right to credit for the purposes of item 2 in the table in regulation 40-5.09 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations)?

Answer

No, the supply of ATM Cash Funding services is not an input taxed financial supply of an 'interest in or under' a debt, credit arrangement, or right to credit for the purposes of item 2 in the table in regulation 40-5.09 of the GST Regulations.

Issue 2

Question

Is the supply of ATM Cash Funding services an input taxed financial supply of an 'interest in or under' Australian currency for the purposes of item 9 in the table in regulation 40-5.09 of the GST Regulations?

Answer

No, the supply of ATM Cash Funding services is not an input taxed financial supply of an 'interest in or under' Australian currency for the purposes of item 9 in the table in regulation 40-5.09 of the GST Regulations.

Relevant facts and circumstances

Entity A is registered for GST and owns and operates automatic teller machines (ATMs) throughout Australia.

Entity A is an acquirer in the ATM payment system. As such, it operates ATMs in which cards may be used to access funds from an account held by the cardholder with a card issuer. In this instance A owns the ATMs it operates as an acquirer.

Entity A has its own Exchange Settlement Account (ESA) with the Reserve Bank of Australia. Entity A's ESA enables it to settle obligations arising between a card issuer and entity A for cash withdrawals made by the card issuer's cardholders from an entity A's ATM.

To operate its ATMs, A needs to maintain adequate levels of physical cash in the form of Australian bank notes in its ATMs to meet withdrawal requests.

Entity B is also registered for GST and provides secure cash delivery services. Under an agreement with A (ATM Agreement), B has agreed to provide various services to A including Cash Services. Under the ATM Agreement, B is required to maintain sufficient credit, to enable it to obtain and provide sufficient cash to meet entity A's ATM funding and replenishment requirements.

To meet its obligations under the ATM Agreement, especially related to funding services, B has entered into Custodial Agreement with a Bank to source the cash. Under the Custodial Agreement, the Bank retains title to the cash and entity B takes possession of the cash as bailee.

Entity B is required under the ATM agreement to securely fill ATM cash canisters with the Bank's cash and to insert these canisters into entity A's ATMs. Entity B is subsequently required to remove and replace used and partly used canisters of cash from the ATMs.

Only entity B has keys, and therefore access, to these ATMs. Entity A cannot take physical possession of the cash although located in its ATMs as it does not have the keys to the ATMs. While the cash is held with the ATMs, the Bank retains title to it and the Custodial Agreement states that entity B retains possession as bailee.

The cash in the ATMs can only be withdrawn by a cardholder via a valid ATM transaction.

There is no tripartite agreement between entities A, B and the Bank. There is no bilateral agreement between A and the Bank. B does not act as agent of entity A or as agent of a third party.

Entity A pays a fee to entity B for the cash services, which include the Cash Funding services.

The calculation of the fee is a detailed exercise and involves a complex operation.

In essence, the fee is made up of two amounts: the Service Cost Amount and the Funding Cost Amount.

The Funding Cost Amount is the amount payable by A for the Cash Funding services. The Service Cost Amount is the amount payable by A for the other cash services.

The ATM Agreement provides that A may at any time engage Third Party Suppliers to supply, and/or provide services in relation to the ATMs. This may include obtaining from Third Party Suppliers, services that are similar to or exactly the same as the services that B is required to provide under the ATM Agreement.

Where the cash is sourced by another third party and not by B, the 'Funding Cost' element will be Nil in the calculation of the fee.

Under the ATM Agreement, B provides its services to A as principal and not as agent of a third party. Also, B does not subcontract the Cash Funding component of the services that it provides to A, under the ATM Agreement.

The Custodial Agreement provides that the Bank is not obliged to supply any product or service to B's clients. The Bank is not obliged to be involved in any way in switching or interchange arrangements affecting the ATMs in which the Bank's cash may be stored.

In practice, the process is as follows:

· B places an order with the Bank for an amount of cash to be replenished in an ATM.

· The Bank procures that amount of cash from a Cash Provider.

· B obtains that amount of cash and loads the cash into cassettes.

· The cassettes are transported to the ATM and B removes the old cassettes and replaces them with the new cassettes.

· B then returns the old cassettes to the depot where the balance cash is removed from the cassettes, counted and redeposited to the credit of the Bank.

· B maintains reconciliation records by ATM for the purposes of reporting to the Bank the balance of the bailment account.

· The settlement of ATM cash withdrawals occurs between a customer's card issuing bank and A, as ATM acquirer and switch/settlement provider. Upon a customer inserting his/her card into an entity A's ATM, entering a PIN and requesting an amount of cash, the transaction switch provider (in this case A) transmits the transaction information to the relevant card issuing bank for approval to allow withdrawal of the requested cash. Each business day, the Reserve Bank of Australia (RBA), as national collator, will net settle the ATM requirements that exist between ATM acquirers (in this case A) and card issuers. The process is completed by way of Exchange Settlement Accounts (ESA) held by participants with the RBA. A holds an ESA.

· Reimbursement of the Bank's cash involves A making a payment in settlement of the cash dispensed from its ATMs, by depositing the relevant amount into a bank account owned by the Bank, nominated by B. A transfers the funds directly into the nominated Bank account.

· Settlement is based on transactions processed by A's network rather than on ATM records of cash dispensed.

· As noted above, where cash is not withdrawn from an ATM and is collected by B, B re-deposits the cash into a Bank account in accordance with the Custodial Agreement.

Detailed reasoning

Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on a taxable supply.

Section 9-5 of the GST Act provides that you make a taxable supply if:

(a) you make the supply for *consideration; and

(b) you make the supply in the course or furtherance of an *enterprise that you *carry on; and

(c) the supply is *connected with Australia, and

(d) you are *registered, or *required to be registered.

However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

Asterisked terms are defined under section 195-1 of the GST Act.

Subsection 9-10(1) of the GST Act provides that a supply 'is any form of supply whatsoever'. Subsection 9-10(2) amplifies the already general provision of subsection 9-10(1) by providing that without limiting subsection 9-10(1), supply includes any of a number of specified matters, including at paragraph 9-10(2)(f) a financial supply.

Financial Supplies

Subsection 40-5(1) of the GST Act provides that a financial supply is input taxed. Subsection 40-5(2) of the GST Act provides that 'financial supply' has the meaning given by the GST Regulations.

Subdivision 40-A of the GST Regulations is about financial supplies. Central to the operation of subdivision 40-A is the concept of an 'interest'. Regulation 40-5.02 of the GST Regulations defines the term 'interest' to mean 'anything that is recognised at law or in equity as property in any form'. Regulation 40-5.02 provides examples of interests, one of which is 'a debt or a right to credit'.

Subregulation 40-5.09(1) of the GST Regulations provides that the provision, acquisition, or disposal of an interest mentioned under subregulation 40-5.09(3) or 40-5.09(4) of the GST Regulations is a financial supply if:

(a) the provision, acquisition or disposal is:

i) for consideration; and

ii) in the course or furtherance of an enterprise; and

iii) connected to Australia; and

(b) the supplier is

i) registered or required to be registered; and

ii) a financial supply provider in relation to supply of the interest.

The interests mentioned in subregulation 40-5.09(3) of the GST Regulations include, at item 2, an interest in or under 'a debt, credit arrangement or right to credit, including a letter of credit' (item 2 interest) and at item 9, an interest in or under 'Australian currency, the currency of a foreign country, or an agreement to buy or sell currency of either kind' (item 9 interest).

Subregulation 40-5.09(4A) of the GST Regulations is about ATM services. Relevantly it provides:

A supply by an entity for a fee of not more than $1000 is a financial supply if it is a supply of 1 or more of the following ATM services:

(a) a withdrawal from an account;

...

A supply of ATM services is a financial supply under subregulation 40-5.09(4A) of the GST Regulations. It is not the provision, acquisition or disposal of an 'interest' and stands as a financial supply independently of the requirements provided under subregulation 40-5.09(1) for 'interests' to be financial supplies.

Cash Funding Services provided by entity B

The ATM Agreement sets out the services that entity B is required to provide to entity A. These include cash services, as defined in the ATM Agreement. One element of the cash services is the provision of cash funding. According to the ATM Agreement, the provision of cash funding services requires entity B to maintain sufficient credit, and obtain sufficient cash to meet the cash requirements of entity A's ATM funding and replenishment requirements.

Cash funding fees

Fees payable to entity B are set out in the ATM Agreement. The calculation of the fees for the cash services is described in the facts as a 'detailed exercise', but is said to be 'in essence' comprising two components, being a service cost amount and a funding cost amount.

The funding cost amount represents the consideration payable by entity A for the cash funding services.

The issue for consideration is whether the cash funding services should be input taxed for GST purposes under item 2 of subregulation 40-5.09(3) of the GST Regulations, or alternatively under item 9 of the same provision.

If the cash funding services consist of, or include the provision, acquisition or disposal of a financial interest, the further requirements of subregulation 40-5.09(1) of the GST Regulations, as set out above, would need to be satisfied for such a provision, acquisition or disposal to be a financial supply. However, for the purposes of this ruling application, it is accepted that these further requirements of subregulation 40-5.09(1) are satisfied.

Accordingly this ruling is limited to determining whether there is, in the facts of this case, a provision, acquisition or disposal of an item 2 or of an item 9 financial interest within the provision of the cash funding services. If there is, and the other requirements of subregulation 40-5.09(1) of the GST Regulations are satisfied, such a provision, acquisition or disposal will be a financial supply.

Interest in or under

GSTR 2002/2: GST treatment of financial supplies and related supplies and acquisitions (GSTR 2002/2) refers to the GST Regulations definition of the term 'interest' in relation to financial supply. GSTR 2002/2 makes the following comments at paragraph 79:

The term 'interest' is taken to be very broad even taking into account the use of the word property…….The examples (under regulation 40-5.02) indicate that the term is given its broadest application so that an interest is as wide as the legal and equitable concept of property, including rights arising under a contract.

Paragraph 82 of GSTR 2002/2 states:

In the context of regulation 40-5.09, we do not ascribe any specific technical significance to establishing whether something is covered as an interest in or an interest under an item in the table...

Item 2 - debt, credit arrangement or right to credit

Item 2 refers to an interest in or under a 'debt, credit arrangement or right to credit, including a letter of credit'. Schedule 7 of the GST Regulations provides examples of financial supplies. Part 2 of Schedule 7 lists examples for financial supplies of item 2 interests. The examples in Part 2 include borrowing and lending, including establishing, maintaining and discharging loans, and a range of activities related to the provision of charge and credit card facilities.

Notes attached to regulation 40-5.11 state that the examples in Schedule 7 are not to be taken as exhaustive, and that if an example in Schedule 7 is inconsistent with the description in Division 40 of the GST Regulations of the financial supply to which the description relates, the description prevails.

Identification of a debt

The term 'debt' is not defined in the GST Regulations and therefore takes its meaning from general law concepts. Schedule 1 of GSTR 2002/2 contains a glossary of financial terms and generally accepted meanings to explain what is understood by the terms used in Schedule 2 of GSTR 2002/2. Most terms in Schedule 1 have been taken from banking and finance dictionaries or are based on explanations provided by industry bodies. Schedule 1 of GSTR 2002/2 defines 'debt' as:

An amount due from one entity to another or a presently existing obligation to pay an ascertainable amount at a future time.

In the facts of this case, there is a threshold issue regarding the identification of debts that may arise as a result of the provision of the cash funding services by entity B.

The matter in issue here is whether entity A incurs a debt when a cardholder validly withdraws cash from an entity A's ATM and if so, to which entity is that debt owed? This requires due consideration of the nature of the transaction and of the supplies made.

GSTR 2006/9 is about supplies. At paragraph 222, under the heading Proposition 16, GSTR 2006/9 states:

Where the parties to a transaction have reduced their understanding of the transaction to writing, that documentation is the logical starting point in determining the supplies that have been made. An examination of any relevant documentation and the surrounding circumstances, which together form the total fact situation, is also important in determining whether the documentation captures the nature of a transaction for GST purposes.

Accordingly, we see the starting point for analysing a transaction for GST purposes as the agreement between the parties, but other relevant documentation and surrounding circumstances which together form the total fact situation should also be taken into account.

Loading cash into the ATMs

Under the ATM Agreement entity B, as part of the cash funding services it provides, is required to obtain and provide sufficient cash to meet entity A's ATM funding requirements. That is, entity A requires physical stocks of cash to be located in its ATMs, so that valid withdrawal requests by cardholders can be met.

It is not in dispute that prior to the point of withdrawal by a cardholder under a valid ATM transaction, entity A is under no obligation to repay any of this cash.

Rebanking unused supplier cash

Entity B is also responsible for removing from ATMs, cash canisters that have been partly used as a result of valid ATM withdrawals. Entity B replaces these with full canisters. Entity B subsequently removes the cash from the partly used canisters (though not on site) and returns that cash to the Bank by depositing to a Bank account.

ATM withdrawals of cash

As provided for in the Custodial Agreement, the Bank permits entity B to allow the Bank's cash to be withdrawn via a valid ATM withdrawal transaction:

The ATM agreement does not contain details of the reimbursement process. There is only one clause that may be interpreted as relating to how reimbursement of supplier cash might occur.

The parties do not agree on the effect of that clause.

Thus, while it is common ground that entity A is obligated to reimburse cash withdrawn from its ATMs, and that it should do so by paying the Bank, the parties do not agree on the precise nature of the obligation that is discharged by entity A making these repayments. That is, the parties have differing contentions about how the surrounding circumstances (that are not clearly specified in the relevant agreements) should be characterised.

Settlement obligations under the ATM Agreement

The ATM agreement does not specify how often or in what manner entity A is obligated to reimburse cash that is dispensed.

We conclude from this that the 'settlement' clauses of the ATM Agreement, without more, do not clearly identify the nature of the obligation that arises when cash is withdrawn from entity A's ATMs through a valid ATM transaction.

Obligations to repay under the Custodial Agreement

The Custodial Agreement places an obligation upon entity B to ensure that the Switch (in this case entity A is both an ATM owner and the relevant Switch) reimburses the Bank for amounts withdrawn.

This may suggest that entity A owes a debt direct to the Bank. However, entity A is not a party to the Custodial Agreement so generally, in line with the principle of 'privity of contract', it would not be bound by the terms of that agreement.

No facts or evidence have been presented to indicate that entity A is bound by the Custodial Agreement, that there are other agreements imposing such an obligation, or that the ATM payment system rules impose an obligation. Whilst entity A remits the amounts to a Bank account there is no evidence or agreement between the parties that this is because entity A is obliged to repay the Bank.

The absence of any debt arising between entity A and the Bank is also supported by a clause of the ATM agreement: This would support the notion that entity B is unable to create an obligation upon entity A to repay the Bank.

Neither entity A nor entity B can point to any specific reasons why clauses specifying how reimbursement would occur are not in the ATM Agreement. Therefore it appears that the implicit understanding between the parties is that entity A will reimburse someone when cash is withdrawn. However beyond this, there is no agreement about the exact nature of any obligations or to whom entity A owes any such obligation.

Calculation of the funding cost amount

The facts state that this is, 'in essence' the actual cost of cash funding. It could be argued that this means in substance, that the cash funding services provided by entity B are 'akin' to lending of money by a financial institution, as the cash funding amount represents the time cost of money and interest.

In our view, the description of, or manner of calculation of a fee is not determinative of the character of the fee. The terms of the ATM Agreement require entity B to 'maintain sufficient credit'. This relates to entity B's dealings with its providers of cash (in this case the Bank), not to entity B's dealings with entity A under the ATM Agreement.

Costs that entity B incur under the Custodial Agreement relate to, inter alia, obtaining sufficient cash so that they can 'provide sufficient cash' for entity A's ATMs. Whatever the GST character of the dealings between entity B and the Bank, that is not in issue in this matter and, in our view, is not relevant to the characterisation of the funding fees entity A is required to pay entity B. In our view, the cash funding fee, even if calculated in such a way as to recompense entity B for its own costs in accessing and providing the cash funding, is not indicative of the nature of the cash funding services provided by entity B.

Conclusion - identification of a debt

Where the contracts and agreements do not fully describe a transaction for GST purposes, in line with GSTR 2006/9 it is appropriate to consider the surrounding circumstances to characterise the transaction. In this case, the parties to the transactions disagree about how the actions of each party should be construed.

The ATM agreement provides insufficient detail to resolve this difference of view conclusively on the facts of this case. However we consider the better view to be that entity A does not owe a debt to entity B. If the parties had intended that withdrawal of the supplier cash from the ATMs would give rise to a debt obligation owed by entity A to entity B, it might reasonably be expected that the parties would have made specific reference to this in the relevant agreement to ensure that entity A's obligations were clear. Under our preferred view it follows that entity A is not providing or disposing of an interest in a debt, nor is entity B acquiring such an interest from entity A.

Contingent debt

The courts have held, in non-tax contexts, that a 'contingent debt' may be a 'debt'. For example, in Hawkins & Ors v. Bank of China (1992) 26 NSWLR 562, Gleeson CJ (at 572) observed:

"Debt" is capable of including a contingent liability.... Dictionaries define "debt" as a liability or obligation to pay or render something. Such a liability may be conditional as well as present and absolute...'

The Commissioner recognises this position in Goods and Services Tax Ruling GSTR 2004/4 Goods and Services Tax: assignment of payment streams including under a securitisation arrangement.

81. A hire purchase agreement gives rise to a presently existing right to receive regular payments from the debtor. In some circumstances receipt of the final payment may be contingent on the option to purchase the goods being exercised. Even though the payment may be subject to a contingency, the right to the payment stream, under an existing hire purchase agreement, is a presently existing right that is property and an interest for the purposes of regulation 40-5.02.

82. Assignment of this property is the disposal of an interest in a debt for GST purposes…' (emphasis added)

In this case, it could be argued that from the time the cash is placed in the ATM, there exists a contingent liability to pay a debt to entity B. However, consistent with our finding above that entity A provides no interest in a debt at the time of withdrawal of the supplier cash from the ATMs, we conclude there is no contingent debt arising at the time the cash is inserted into the ATMs.

Identification of a credit arrangement and right to credit

The glossary in Schedule 1 of Goods and Services Tax Ruling GSTR 2002/2 defines a credit arrangement as:

an arrangement under which an entity lends money on terms that include deferred repayment, or under which payment of a debt owed by one entity to another is deferred or time is allowed to pay.

In FC of T v American Express International Inc & Anor [2010] FCAFC 122 (Amex FFC) Kenny and Middleton JJ held at 154:

Under accepted principles of statutory construction, the construction of undefined terms in legislation "begins with the ordinary meaning of the words, considered according to their context and the legislative purpose"…As Stone J observing in considering the Bankruptcy Act 1966 (Cth), in which "credit" is undefined, "[b]roadly speaking, the term ['credit'] means the provision of funds either directly to the person obtaining the credit or to a third party provider of goods and services to that person subject to the obligation of the person obtaining credit to pay at a later time": see Fitz-gibbon v Inspector General in Bankruptcy (2001) 180 ALR 475 at 479 [15]. This is the interest supplied by Amex Intl to charge card customers. Whilst, as the respondents say, one must focus on the "contractual arrangement", the focus is on the entire contractual arrangement considered contextually and as a whole. (emphasis added).

This overturned the narrower view of credit that the primary judge (Emmett J in FC of T v American Express International Inc v Commissioner of Taxation & Anor [2009] FCA 683 (Amex)) proposed, which was that if a debt was payable on a future date, credit would only arise upon further deferment past that due date. The Amex FFC decision is consistent with the general proposition in GSTR 2002/2 that credit relates to the deferment of the obligation to pay (or debt) to a later time.

Self Managed Superannuation Funds Ruling SMSFR 2009/4 is about the meaning of 'asset', 'loan', 'investment in', 'lease', and 'lease arrangement' in the definition of 'in-house asset' in the Superannuation Industry (Supervision) Act 1993. Paragraph 61 of SMSFR 2009/4 states that for credit to be provided there must be a present ascertainable debt. An obligation to make a future payment is a present debt for which payment is not yet due (a debitum in praesenti, sovendum in futuro ) that matures, when the time for payment arrives, into a present debt for which payment is due ( a debitum in praesenti ).' (Geeveekay Pty Ltd, Geoffrey Keogh and Veronica Keogh v. Director of Consumer Affairs Victoria [2008] VSC 50 Bell J. paragraphs 83 to 85).

This supports the view that an interest in or under a credit arrangement cannot arise unless when the arrangement or facility is used a debt obligation arises and that debt obligation is deferred either by having a future payment date or a forbearance of a pre-existing debt. This is consistent with the conclusions reached in Amex FFC.

In the facts of this case, the time at which entity A's obligation to reimburse the cash is not specified, but taking into account the Custodial Agreement and the settlement clause in the ATM Agreement, it occurs at the earliest when the cash is validly withdrawn from an entity A's ATM (and such a transaction is recorded by the entity A's network).

Entity A in practice reimburses the cash withdrawn on the next business day. That is, there is no substantive deferment of any obligation to reimburse that might arise on withdrawal. Under the terms of the ATM Agreement there is no explicit deferment of the time for reimbursement, nor is there any other indication of the consequences of such payments becoming overdue. The settlement clause makes no reference to the timeframes for any settlement occurring. There is unlikely to be any implicit arrangement or acceptance of a deferral of payment of a debt as the parties to the agreement do not agree that such a debt between them exists.

For there to be a right to credit, there must be an agreement for entity B to provide credit to entity A that entity A has the right to utilise. Consistent with the above discussion on credit arrangements, we take the view there is insufficient evidence, based on the ATM Agreement, that entity B provides credit to entity A and therefore entity B does not provide or dispose of an interest in or under a right to credit.

Conclusion Item 2

Entity B does not provide the cash for filling and replenishing entity A's ATMs in the form of a loan of money to entity A. The essential nature of the cash funding service provided by entity B to entity A is not one of providing an interest in a credit arrangement, or of entity B acquiring an interest in a debt from entity A. Likewise it is neither one of entity A providing an interest in a debt to entity B, nor of entity A making an acquisition-supply of an interest in a credit arrangement.

The cash funding service does not result in a financial supply occurring under Item 2.

Legislative provisions and regulations for item 9

As noted in respect of Issue 1 above, subsection 9-10(2) of the GST Act includes as a supply any of a number of specified matters, including at paragraph 9-10(2)(f) a financial supply.

Subsection 9-10(4) of the GST Act deals separately with a supply of money. It provides that:

However a supply does not include a supply of *money unless the money is provided as *consideration for a supply that is a supply of money.

'Money' is defined inclusively in section 195-1 of the GST Act. Included at paragraph (a) of the definition is 'currency (whether of Australia or of any other country).

The relevant GST Regulations are also set out above in relation to Issue 1. The interests mentioned at subregulation 40-5.09(3) include, at item 9, an interest in or under:

Australian currency, the currency of a foreign country, or an agreement to buy or sell currency of either kind

Part 7 of Schedule 7 of the GST Regulations mentions the following examples for item 9:

· Foreign currency in cash form

· Foreign currency drafts

· Travellers cheques

· International cheques

· Collection, negotiation and endorsement of instruments (including cheques) for payment in foreign currency, including message services

· Forward contracts for transactions to buy or sell foreign currency

· Options to buy or sell foreign currency

· Conversion of Australian currency into foreign currency and conversion of foreign currency into Australian currency

In the facts of this case, there is no supply of foreign currency, no conversion of currency and no agreement to buy or sell Australian or foreign currency. For the supply of cash funding services to be an input taxed financial supply under item 9, there must be, in the first instance, a provision by entity B of an interest in or under Australian currency, being the banknotes that are inserted into entity A's ATMs by entity B.

Subregulation 40-5.09(4A) of the GST Regulations, which is about financial supplies of certain ATM services, is also set out above in relation to Issue 1.

Interest in or under

As noted above in relation to Issue 1, regulation 40-5.02 of the GST Regulations provides that an interest is anything that is recognised at law or in equity as property in any form.

In Commissioner of Taxation v American Express International Inc & Anor [2010] FCAFC 122 (Amex FFC), the meaning of 'property' in the definition of 'interest' was considered. The Commissioner argued that the meaning of the word 'property' in the definition of 'interest' in regulation 40-5.02 should be construed in light of the less formalistic discussion of the concept of 'property' in Yanner v Eaton (1999) 201 CLR 351 (Yanner).

At paragraph 145 of the joint judgment of Kennedy and Middleton JJ in Amex, their Honours stated:

Although the subject matter in Yanner is very different indeed from that in these appeals, the discussion about the concept of 'property' is helpful in the present context. First, Yanner shows that the meaning of the word 'property' can be fixed by relevant context, and the rather narrow meanings given in the authorities cited by the respondents will not apply in all contexts. Secondly, the word 'property' can be applied to different kinds of relationships between a person and a subject matter, and can be understood as referring to the degree of power that is recognised in law as power permissably exercised over the thing. (emphasis added)

In Travelex Ltd V Commissioner of Taxation [2010] HCA 33 (Travelex), the High Court considered whether the sale of foreign currency banknotes at a bureau de change in the departure lounge of Sydney International Airport gave rise to a GST-free supply of the foreign currency under paragraph (a) of item 4 of subsection 38-190(1) of the GST Act. Item 4 is about supplies of rights and paragraph (a) provides that a supply will be GST-free if it is a supply that is made in relation to rights if the rights are for use outside Australia.

It was not in dispute in Travelex that the supply of the banknotes was in the first instance a financial supply, being a supply of an item 9 interest in currency. However, the majority (French CJ and Hayne J in a joint judgment and Heydon J) also held that the supply of the banknotes was GST-free under subsection 38-190(1) and that subsection 9-30(3) therefore applied to treat the supply as GST-free. Both judgments stressed the importance of the rights that attach to the currency.

At paragraph 27 of the joint judgment, their Honours observed:

When the supplier sells the foreign currency to the acquirer, the acquirer obtains the rights that attach to, or are constituted by, the ability to use the currency. Because the supply is a supply of property in the currency, the supply is a supply 'in relation to' the rights that attach to the currency, without which, property in the currency would be worthless.

The banknotes take the physical form of pieces of paper and Heydon J noted that apart from the rights that attach to the banknotes, the pieces of paper had little value. His Honour listed some peripheral uses to which such paper could be put, then noted:

But uses of that kind, which are very remote from their real purpose, would not prevent both the pieces of paper and the coins from being almost worthless.

In the facts of this case, when the currency is inserted into the ATMs, in our view entity A acquires none of the rights of usage that attach to it.

Is there a provision of an interest in or under Australian currency?

In the facts of this issue, entity A owns the ATMs which entity B is required to fill and replenish with cash and from which, as necessary, remove cash. Entity B is required to source the cash for these purposes.

Entity B is the sole holder of all keys to entity A's ATMs at all times to enable it to insert and remove cash. Entity A cannot take physical possession of the cash in its ATMs as it does not have the keys to the ATMs. Individual banknotes can only be withdrawn from the ATMs by a cardholder via a valid ATM transaction, though entity B may remove and replace partly used canisters of cash.

If 'property' in the cash that is inserted into the ATMs by entity B can be understood as referring to the degree of power that is recognised in law as power permissibly exercised over the thing, (as observed by the Full Federal Court in Amex FFC), then in the facts of this case it is difficult to see what power that is recognised in law that entity A may permissibly exercise over the cash.

Entity A's control over the cash in its ATMs

According to the information provided in relation to the circumstances in which an entity A's ATM may dispense or withhold cash, our view is that it is the framework of rules, and legislative and contractual obligations that dictates and controls this.

Title and possession

Entity B sources the cash it uses to fill and replenish entity A's ATMs from the Bank. The terms of the Custodial Agreement under which this happens make it clear that the understanding of both entity B and the Bank is that entity B takes possession of the Bank's cash only in the capacity of bailee and custodian and that this remains the arrangement until the cash is validly withdrawn from entity A's ATMs. This agreement makes it clear that title to the cash remains with the Bank at all times until it is withdrawn from an ATM by a cardholder under a valid ATM transaction.

In the ATM Agreement between entity A and entity B there is no indication that entity B sought to convey the impression that they held title to the cash or that they sought to, or were able to transfer title in the cash to entity A.

As a general proposition, an entity that is in possession of currency will hold title to that currency. However, the effect of a bailment agreement is to separate legal title (which in this case the Bank retains) from possession (given to entity B). In our view entity B holds the cash under bailment from the Bank and that at no time does title in the cash pass to entity B.

It is not in dispute that once cash is validly withdrawn by a cardholder from an ATM, title passes to the cardholder. However, there are competing views as to whether, at the instant the valid ATM transaction occurs, title in the cash passes directly from the Bank to the cardholder, or from the Bank first to entity A and then to the cardholder.

It could be argued that title passes first to entity A and that this occurs because the arrangement under which the cash is held in their ATMs is one of quasi-bailment or mutuum. A mutuum has been described as "a loan for consumption; a loan of chattels, upon an agreement that the borrower may consume them, returning to the lender an equivalent in kind and quantity; as, a loan of corn, wine or money which is to be used or consumed, and is to be replaced by other corn, wine or money".(see Black's Law Dictionary, 5th edition).

In Fuel Tax Ruling FTR 2009/1, the Commissioner considered fuel as the subject of mutuum under hire arrangements.

117. Mutuum requires replacement by the equivalent in kind of the goods lent that are used or consumed. Mutuum is confined to consumables or fungibles. As the thing lent will be consumed and as such incapable of being returned in specie, the property in the thing lent passes to the borrower.

118. In Comptroller-General of Customs v. Woodlands Enterprises Pty Ltd, ex parte Woodlands Enterprises Pty Ltd , McPherson JA, in the course of dealing with whether there was a sale or disposal of fuel under the hire arrangement, also discussed whether the fuel was the subject of bailment and mutuum:

It must in any event be doubtful whether it is possible to defer the passing of the property in circumstances like these. Roman law recognised a contract known as mutuum , which was a loan for consumption or use of goods which were usually if not always fungibles. Oil is an example commonly given. In any case the Roman contract of mutuum required replacement by the equivalent in kind of the goods used or consumed.

In our view, the arrangement under which the cash is inserted into entity A's ATMs is not a quasi-bailment or mutuum. Currency, though fungible, is not goods. Further, for title in the thing that is the subject of the mutuum to be passed to the recipient entity, the providing entity must have held title to it. As noted above, it is our view that entity B at no time holds title to the cash.

The view that entity A holds the cash under a mutuum arrangement is not supported by the terms of the agreement between entity A and entity B. Further, the agreement between entity B and the Bank is clear that title at no time passes to entity B, in our view preventing the passage of title from entity B to entity A.

In our view, entity A has no claim to title to the cash held within its ATMs because it has no possession or access over it, nor does it have individual discretion over issuing or withholding cash from a particular cardholder - even though it may be bound by legislation or contractual obligations as an ATM provider to issue cash or withhold cash in certain stipulated circumstances. That does not change at the point of valid withdrawal and accordingly in our view title to the cash moves directly from the Bank to the cardholder at that point.

It could be argued that, because an entity A's ATM dispenses the cash to the cardholder, it must be entity A that conveys title in the cash to the cardholder. We do not accept that view.

An ATM cash withdrawal to a cardholder is recognised in subregulation 40-5.09(4A) as a financial supply of ATM services. Subregulation 40-5.09(4A) does not require the provision, acquisition or disposal of an 'interest' as defined at regulation 40-5.02 to occur for there to be a financial supply.

The rights attaching to currency that prevent it being worthless are rights that go with legal title. Without this, in our view entity A does not acquire any item 9 interest in the cash held in their ATMs.

Conclusion - We therefore conclude that under the cash funding services, entity B does not provide an 'interest in or under' Australian currency for the purposes of item 9 in the table in regulation 40-5.09 of the GST regulations to entity A. It follows that entity A does not acquire an interest in currency from entity B.

Consistent with our view that the supply of the cash funding services does not consist of or include an item 2 or item 9 financial supply, we do not see any mixed or composite supply in the supply of these services.