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Ruling

Subject: GST status of national park fees

Question 1

Are vehicle entry fees (day, annual, bus) to national parks consideration for a supply?

No. Therefore no taxable supply is made.

Are entry fees paid to you by a lessee of an attraction within a national park consideration for a supply?

No. Therefore no taxable supply is made.

Are entry fees to specific national park attractions such as boardwalks and museums consideration for a supply?

Yes. Therefore taxable supplies are made.

Are camping fees or charges for camping permits for national parks consideration for a supply?

Yes. Therefore taxable supplies are made.

Are licence fees for commercial tour operators or fitness trainers to conduct their activities in national parks consideration for a supply?

Yes. Therefore taxable supplies are made.

Are per head per day (or part day) fees charged to commercial tour operators or fitness trainers for taking their clients into national parks consideration for a supply?

No. Therefore no taxable supply is made.

Relevant facts and circumstances

· You are a government department and are registered for GST.

· You are responsible for administration of national parks within your jurisdiction.

· You impose certain charges and fees under relevant governing legislation.

· You need to confirm whether these fees and charges are exempt from GST under the amended Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

· Currently you treat all entry fees to the national park as taxable. All fees mentioned in the ruling request are currently being treated as taxable.

· You lease an attraction within the park to an independent, non-government body (the Lessee/operator).

· Entry to this attraction includes national park entry when a ticket is purchased from the operator.

· The terms of your agreement state that the lessee will collect and remit to you a park entry free from each and every person acquiring a ticket to the attraction (excluding bona fide staff of the Lessee).

· The lessee collects (and later remits to you) a park entry fee for every ticket issued for the attraction on a per user per day basis in accordance with a formula.

· The Lessee must ensure that a statement is provided to you every month with the remittance of the park entry fee which outlines all the details reasonably required by the Lessor to determine the amount of the park entry fee to be remitted by the Lessee.

· You then provide the lessee with a tax invoice for the park entry fee component (currently including GST) and the lessee then provides that amount to you. You then pay the GST amount to the ATO.

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 195-1,

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

A New Tax System (Goods and Services Tax) Regulations 1999 81-10.01.

Reasons for decision

When the GST was introduced the Commonwealth, states and territories agreed that the GST would apply to the commercial activities of government at all levels, but that the non-commercial activities of government would be outside the scope of the GST.

Regulatory charges that do not relate to particular goods or services will be exempt from GST, including licences, permits and certifications that are required by government prior to undertaking a general activity.

In this context, Division 81 of the GST Act allows entities to self assess the GST treatment of a payment of an Australian fee or charge in accordance with certain principles. Specifically, section 81-10 of the GST Act considers the effect of payment of certain Australian fees and charges.

An Australian fee or charge is a fee or charge (however described), other than an Australian tax, imposed under an Australian law and payable to an Australian government agency (section 195-1 GST Act). An Australian law means a Commonwealth, state or territory law, and Australian government agency means the Commonwealth, a state or territory, or an authority of the Commonwealth or of a state or territory (section 195-1 GST Act, as defined by reference to section 995-1, Income Tax Assessment Act 1997).

In your circumstances you have imposed certain fees under applicable law. You are a government department are therefore considered to be an Australian government agency. This satisfies the above requirements for the amounts to be considered an Australian fee or charge.

Australian fees or charges are no longer treated as the provision of consideration for a supply at first instance where they are of the nature described in subsections 81-10(4) or (5) of the GST Act. If a payment is not consideration for a supply, then the supply will not be a taxable supply under section 9-5 of the GST Act.

Subsection 81-10(4) of the GST Act considers relevant fees or charges. A payment is not the provision of consideration to the extent that the fee or charge relates to, or relates to an application for, the provision, retention, or amendment, under an Australian law, of a permission, exemption, authority or licence (however described).

However, a regulation can be made with the effect of treating such payments as the provision of consideration for a supply to the extent that the payment is an Australian fee or charge that is, or is of a kind, prescribed by the regulations (Section 81-10(2) GST Act . If the fee or charge is of the type prescribed in the regulations, this will override any possibility of determining that the charge is not consideration under subsections 81-10(4) or (5) of the GST Act, even where it may satisfy the types of fees considered in those subsections.

Regulations have been made in relation to Division 81, at regulation 81-10.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST regulations). Under sub regulation 81-10.01(c), fees and charges which constitute consideration include a fee for hire, use of, or entry to a facility, except for an entry fee to a national park.

It is therefore necessary to consider under the GST Regulations whether each of the fees that you have queried are properly characterised as being for an 'entry fee to a national park' and are therefore exempted from being consideration - or whether they are actually a fee for hire, use of or entry to something else.

The use of the words 'charges which constitute consideration include a fee for' (emphasis added) in the regulation are particularly significant. Use of the word 'for' means that there must be a direct link between the supply and the consideration, the consideration cannot just be 'in connection with' the supply. In Berry v FC of T (1953) 89 CLR 653 (Berry's Case), Kitto J held (at p659) that 'in connection with' was a broader test than 'for'.

"A consideration may be 'in connection with' more things than that 'for' which it is received."

While we accept that numerous fees may be 'in connection with' the national park entry, in order to not be consideration for a supply the amount must be directly for the entry to the national park. There must be a direct link between the amount being paid and the national park entry. The amounts cannot be for any other supply or for anything in addition to the basic national park entry fee.

Where it is accepted that the payment is for national park entry then it is specifically exempted from being consideration. This means that a taxable supply is not made as a taxable supply must be for consideration (section 9-5 GST Act).

However, where the fee paid is not for national park entry it will be consideration under sub regulation 81-10.01(c) of the GST regulations. Where the other elements of section 9-5 of the GST Act have been satisfied the supply is a taxable supply.

The following is an analysis of each of the types of fees you have queried:

· Vehicle entry fees (including day car entry, annual car entry and bus entry)

The exemption in the regulations for entry fees to a national park does not specify that it is only for people. Therefore, it is considered that payments for vehicle entry fees are payments for entry to a national park.

These fees are therefore not consideration for a supply, and as such this transaction is not a taxable supply.

· Entry fees included in another attraction

An attraction within the national park is operated under lease by an independent, non-government body (the lessee).

Entry fees to the attraction include national park entry fees. The total fees paid by patrons for the attraction are more than just the fees necessary for entry to the national park. These fees are paid to an entity that is not an Australian government agency, and the attraction is a service or supply over and above the entry to the national park.

The fee the operator/lessee pays to you for persons entering the national park is properly characterised as a fee for entry to the national park, it is payable to you and you are an Australian government agency. It is therefore not consideration for a supply, and as such this transaction is not a taxable supply.

· Fees for specific national park attractions such as boardwalks and museums

Where an additional fee is charged for entry to an attraction, this is a fee for entry to something other than the national park. The fees are not a regulatory charge as they relate to a particular good or service.

The fees received are therefore consideration for a supply of entry to the attraction.

Where there is a price for entry to the attraction which includes the national park entry fee, the national park entry fee component will not be consideration for the supply. GST will only be applicable for the consideration relating to the additional supply.

· Camping fees or charges for camping permits

Fees charged for camping are additional fees for the supply of a right in addition to the right to enter the national park. These fees are for a particular use of the national park rather than just entry to the national park. A fee for the use of a facility is a fee which constitutes consideration under 81-10.01(c).

These fees are therefore consideration for a supply.

· Licence fees for commercial tour operators or fitness trainers to conduct their activities in national parks for certain periods

Licence fees are also a fee the use of the national park, rather than entry to the national park. They are additional fees for something in addition to the entry to the national park. A fee for the use of a facility is a fee which constitutes consideration under 81-10.01(c).

These fees are therefore consideration for a supply.

The ability to use the national park for tour operations or fitness training is additional to regulatory fees to be licensed to participate in those industries in the first place. As discussed above, we consider these types of fees to have not been exempt under the determination either as they constitute fees for occupancies.

· Per head day or part-day fees charged to commercial tour operators or fitness trainers for taking their clients into parks.

These fees are properly characterised as for entry into the national park. This reasoning applies only where the amount charged is purely for the national park entry component. Where any other fees or charges are included in the amount, this amount will not be for national park entry. It will be consideration for a supply.

Transitional arrangements

This information regarding Division 81 applies to the law as amended from 1 July 2011. Until 1 July 2011, various exemptions were set out in detail in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 1) (the determination). As a transitional measure, fees and charges listed in the Treasurer's determination as at 30 June 2011 remain exempt until 1 July 2012.