Edited version of private ruling

Authorisation Number: 1011905394668

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Ruling

Subject: GST and waste management services

Question

Will charges for the supply of waste management services, including for an optional green waste recycling service, (the services) be exempt from GST from 1 July 2012?

Answer

Yes, charges for the supply of the services will be exempt from GST from 1 July 2012 as they will be an Australian tax and payment of the charges is not treated as the provision of consideration.

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.

· The Local Government entity is registered for GST and provides a waste management service as required under the Legislation, which requires that local governments to administer and enforce local government public health risks.

· The Local Government entity levies a utility charge on waste management services. This charge is compulsory and applies irrespective of whether the service (mobile garbage bin waste collection) is actually used.

· All improved premises (i.e. premises comprising buildings or other improvements) incur the mandatory waste management service utility charge.

· The green waste is charged as a utility charge under the general rate charges to the ratepayer. This is for the kerbside collection of the bins containing the green waste.

· The Local Government entity has the power to make and levy charges.

· All improved premises (i.e. premises comprising buildings or other improvements) incur the mandatory waste management service utility charge.

· Separate charges under general rates are made for optional green waste recycling services.

· Both the mandatory waste management service utility charge and the optional green waste recycling service charge are shown on the one notice.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 81-5.

A New Tax System (Goods and Services Tax) Act 1999 Section 81-10.

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

Summary

From 1 July 2012, charges by the Local Government entity for the services will be exempt from GST as they will be an Australian tax and payment of the charges is not treated as the provision of consideration.

Detailed reasoning

Prior to 1 July 2011, Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provided that GST applied to payments of taxes, fees and charges, except those excluded from GST by a written determination of the Treasurer.

From 1 July 2011, a limited self-assessment 'principles-based' approach has been introduced. The GST law has been amended to replace the Division 81 and determination mechanism with specific legislative provisions to ensure that Australian taxes and certain government fees and charges are not subject to GST. The legislation also allows for the making of regulations to treat an Australian tax, or an Australian fee or charge, in a particular way.

From 1 July 2012, the self-assessment approach will have full effect in allowing entities to self assess the GST treatment of such payments.

Relevantly, new sections 81-5 and 81-10 of the GST Act state:

Section 81-5  Effect of payment of tax

Australian tax not consideration

(1) A payment, or the discharging of a liability to make a payment, is not the provision of *consideration to the extent the payment is an *Australian tax.

Regulations may provide for exceptions

(2) However, a payment you make, or a discharging of your liability to make a payment, is treated as the provision of *consideration to the extent the payment is an *Australian tax that is, or is of a kind, prescribed by the regulations.

(3) For the purposes of subsection (2), the *consideration is taken to be provided to the entity to which the tax is payable, for a supply that the entity makes to you.

81-10  Effect of payment of certain fees and charges

Certain fees and charges not consideration

(1) A payment, or the discharging of a liability to make a payment, is not the provision of *consideration to the extent the payment is an *Australian fee or charge that is of a kind covered by subsection (4) or (5).

Prescribed fees and charges treated as consideration

(2) However, a payment you make, or a discharging of your liability to make a payment, is treated as the provision of *consideration to the extent the payment is an *Australian fee or charge that is, or is of a kind, prescribed by the regulations.

(3) For the purposes of subsection (2), the *consideration is taken to be provided to the entity to which the fee or charge is payable, for a supply that the entity makes to you.

Fees or charges paid for permissions etc.

(4) This subsection covers a fee or charge if the fee or charge:

(a)  relates to; or

(b)  relates to an application for;

the provision, retention, or amendment, under an *Australian law, of a permission, exemption, authority or licence (however described).

Fees or charges relating to information and record-keeping etc.

(5) This subsection covers a fee or charge paid to an *Australian government agency if the fee or charge relates to the agency doing any of the following:

(a)  recording information;

(b)  copying information;

(c)  modifying information;

(d)  allowing access to information;

(e)  receiving information;

(f)  processing information;

(g)  searching for information.

For the purposes of section 81-5 of the GST Act, section 195-1 of the GST Act provides that an Australian tax is a tax imposed under an Australian law, being a law of the Commonwealth, a State or a Territory.

The Local Government entity levies a utility charge on waste management services. This charge is compulsory and applies irrespective of whether the service (mobile garbage bin waste collection) is actually used. Further, all improved premises (i.e. premises comprising buildings or other improvements) incur the mandatory waste management service utility charge.

A utility charge is also levied by the Local Government entity on the supply of the optional green waste service,

As the charges for the mandatory waste management services and the optional green waste service are imposed under an act, the charges for the services are considered to satisfy the requirements of an Australian tax for the purposes of section 81-5 of the GST Act

Further, payment of these charges is not an Australian tax that is, or is of a kind, prescribed by the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) for the purposes of subsection 81-5(2) of the GST Act above as being treated as the provision of consideration.

Therefore, as these waste management charges, including the green waste bins collected kerbside and included in the general rates notice, are considered to satisfy the requirements of an Australian tax for the purposes of section 81-5 of the GST Act and payment of the charges has not been prescribed by the GST Regulations for the purposes of subsection 81-5(2) of the GST Act, the charges will be exempt from GST from 1 July 2012.

It should be noted that this exemption only extends to garbage collection, such as collection on a regular basis, and similar services which are levied on ratepayers and included as part of their rates.