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Authorisation Number: 1012045801296

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Ruling

Subject: GST and agreement

Question 1

1.1 Are you or the people you are representing an entity for the purposes of section 184-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

1.2 Is each of you, a relevant entity for the purposes of determining whether there is an entity that is required to be registered for the purposes of section 23-5 of the GST Act?

Answer

No

No

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.

· You are the authorised representative group of the people (the Peoples) living in a particular area in Australia.

· The group comprised a number of individuals.

· The group is not registered for goods and services tax (GST).

· A Pty Ltd (A) is an Australian company and is registered for GST.

· A holds the Current tenements which are overlapped, in whole or in part, by the Peoples' native title claim.

· A has entered into an agreement (Agreement) with you after 1 July 2000.

· The Agreement enables A to access the land on which the Peoples' Claim is registered.

The Peoples

· The Peoples is a group of individual persons associated on the basis of their heritage and ancestry; being a group of people having the same ancestry and cultural heritage.

· You have also advised that the Peoples identity was formalised for the purpose of initiating a Native Title Claim in respect of the area described in the Claimant Application Summary. However, the Peoples have in effect and reality always existed. There was no formation date or point in time at which the group came into being.

· The Peoples have the following features:

o no formal or informal rules or contractual relationship between its members;

o no constitution or governing document;

o membership carries no formal rights or obligations, and is limited to those persons with the requisite ancestral lineage; and

o membership of the group consists of (and is restricted to) those descendants, from time to time, of the persons being the Peoples.

The Agreement

Some of the key points of the Agreement are reproduced as follows:

o the provision of benefits by A in compensation for any effect of A's activities on Native Title within the Claim Area. The provision of benefits by A in consideration for the consent to the addition of any excluded land within the Tenements and the grant of any Future Tenements.

o The Peoples consent to the addition of excluded land within the Claim Area, grant of any Future Tenements; and addition to excluded land within the Claim Area.

Relevant legislative provisions

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

Section 9-5

Section 9-10

Section 9-20

Section 23-5

Section 184-5

Section 195-1

Reasons for decision

Summary

1.1 You or the Peoples are not an entity for the purposes of section 184-1 of the GST Act as explained below.

1.2 Each individual member of the representative group is not required to be registered for the purposes of section 23-5 of the GST Act in relation to the Agreement.

Detailed reasoning

'Entity' is defined under subsection 184-1 of the GST Act:

Entity means any of the following:

(a)  an individual;

(b)  a body corporate;

(c)  a corporation sole;

(d)  a body politic;

(e)  a *partnership;

(f)  any other unincorporated association or body of persons;

(g)  a trust;

(h)  a *superannuation fund.

Note:

The term "entity" is used in a number of different but related senses. It covers all kinds of legal persons. It also covers groups of legal persons, and other things, that in practice are treated as having a separate identity in the same way as a legal person does

We will consider whether you and the Peoples is an entity for GST purposes.

You have provided in the application for private ruling:

You means the authorised representatives of the Peoples as parties to the Agreement.

Peoples means the persons claiming to hold native title pursuant to the Native Title Claim.

Miscellaneous tax ruling MT 2006/1 considers the meaning of certain key words and phrases used to define an entity and an enterprise in determining the entitlement to an Australian business number (ABN).

Goods and services tax determination GSTD 2006/6 provides that the principles in MT 2006/1 apply equally to the terms 'entity' and 'enterprise' and can be relied upon for GST purposes.

The Peoples

Of relevance to your question is paragraph 184-1(f) of GST Act to consider whether the Peoples is an entity for GST purposes.

Paragraphs 44 to 54 of MT 2006/1 outline the specific requirements need to be present for an unincorporated association or body of persons to constitute an entity for GST purposes.

Paragraph 47 of MT 2006/1 provides for a broad definition that includes two elements to consider in determining whether an unincorporated association or body of persons is an entity:

§ a group of persons who associate to achieve a common aim or purpose, and

§ the group of persons are bound by mutual obligations and rights.

Paragraphs 50 and 51 of MT 2006/1 provides further:

50. In Conservative and Unionist Central Office v. Burrell (Inspector of Taxes) 21 the court considered some of the characteristics of an unincorporated association or body of persons as follows:

o there are members of the association;

o there is a contract binding the members amongst themselves;

o there is a constitutional arrangement for meetings of members and for appointing officers;

o the members will normally be free to join or leave the association; the association will normally continue in existence independently of any change to the composition of the association; and

o as a matter of history, there will have been a moment in time when a number of persons combined to form the association.

However, not all of these characteristics need to be present.

51. Courts have also held that for a group of persons to be an association or body of persons, more than a common aim or purpose is required ( Twycross and other v. Potts and another [1928] SC 633

'Native title claim group' is mentioned in section 61(1) of the Native Title Act 1993 (Native Title Act):

The application must be made by a person or persons authorised by all of the persons (the native title claim group) who, according to their traditional laws and customs, hold the common or group rights and interests comprising the particular native title claimed, provided the person or persons are also included in the native title claim group.

You have provided that:

§ The Peoples, for the purposes of the Native Title Claim, is not a group in the nature of a club, society or unincorporated association. It is a group of individual persons associated on the basis of their heritage and ancestry, being a group with the same cultural heritage.

§ The Peoples have no formal or informal rules or contractual relationship between its members. It has no constitution or governing document.

§ Members of the Peoples are associated by virtue of their cultural heritage, not in order to achieve a common goal or purpose.

§ Practically, the Peoples have always existed and the sole reason that there is a formalised identity of the group was for the purpose of making the Native Title Claim.

It is considered that the Peoples is not an entity for GST purposes as this is not amount to an association or body of persons for the purpose of satisfying both of the elements above.

Therefore, the Peoples is not an entity for the purposes of section 184-1 of the GST Act. It follows that the representative group is not capable of making any supply for GST purposes.

The representative group (you)

Under section 62(1)(a) of the NTA, the application was accompanied by an affidavit sworn by the applicant that the applicant is authorised by all the persons in the native title claim group to make the application and to deal with matters arising in relation to it.

You have provided that:

§ you are the registered Native Title Claimant for the Peoples Native Title Claim, which comprised a number of individuals,

§ you are the authorised representatives of the Peoples as parties to the Agreement,

§ you collectively hold the authority of the Peoples in relation to the application of a private binding ruling.

It is considered that you were collectively representatives of the Peoples which is not an entity for GST purposes, and therefore are also not an entity for GST purposes.

1.2 Is each individual member of the representative group, a relevant entity for the purposes of determining whether there is an entity that is required to be registered for the purposes of section 23-5 of the GST Act?

Each of the Applicants

You are the Registered Native Title Claimant for the Peoples Claim, which comprised a number of individuals apply for the Ruling in your own right and as representatives of the Peoples

You (the individuals), in your own right, are entities for GST purposes under paragraph 184-1(a) of the GST Act. However, as discussed above, you become a party to the Agreement as representatives of the Peoples. You, in your own right, have not conducted any transaction/supply in relation to the Agreement.

An enterprise is an activity or series of activities done in certain ways as provided for under subsection 9-20(1) of the GST Act.

In particular, an 'enterprise' includes an activity or series of activities done:

(a) in the form of a business;

(b) in the form of an adventure or concern in the nature of trade; or

(c) on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property.

From the information provided, there is no indication that each of the Applicants is conducting activities in the form of a business or in the form of an adventure or concern in the nature of trade. Whilst the words 'in the form of' broaden the set of activities that would be considered a business or adventure or concern in the nature of trade, it is considered that some of the main factors that indicate the carrying on of a business or trade are missing, viz significant commercial activity, profit making intention, purpose of the activities and businesslike organisation.

Paragraph 9-20(1)(c) of the GST Act provides that an enterprise includes an activity that is done on a regular or continuous basis, in the form of a lease, licence or grant of an interest in property. This paragraph refers to the activity of participating as a lessor or grantor of an interest in a property.

It is the State that grants the tenements, therefore each of the Applicants are not entities granting a lease, licence or interest in the property for the purposes of paragraph 9-20(1)(c) of the GST Act.

Each of the Applicants has not conducted any activity in relation to the Agreement and therefore is not carrying on any enterprise as being a party to the Agreement. Therefore each of the Applicants are not, a relevant entity for the purposes of determining whether there is an entity that is required to be registered for the purposes of section 23-5 of the GST Act.