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Ruling

Subject: GST and the supply of Pool safety certificates in Queensland

Question

Is my charge for supplying a Pool safety certificate a taxable supply?

Answer

Yes, your supply of the pool safety certificate is a taxable supply.

Relevant facts and circumstances

You are registered for GST and as part of your enterprise you conduct safety checks on pools in Queensland.

You hold a 'pool safety inspector' license issued by the Queensland Government under the Building Act 1975. Under this license you inspect Queensland properties with a pool to ensure that they comply with the pool safety standards.

Under new swimming pool safety laws: a pool safety certificate, issued by a licensed pool safety inspector, is required when selling, buying or leasing a property with a pool in Queensland.

You are contracted by pool owners to provide pool inspections. If a pool is a complying pool you complete your findings to the 'Pool Safety Council' (PSC) via their web site.

You pay for the certificate via credit card and download the completed certificate.

After you download the certificate you must put your name and the Pool safety inspector license number on the form and sign and date it before you issue it to the property owner.

The invoice you issue sets out the charge for the inspection fee (which you set) and a separate line for the charge for the Safety pool certificate.

You are currently charging GST on your supplies of both the Pool safety certificate and the inspection fee.

The Qld government charges $X.XX for the issuing of the pool safety certificate, and have classified it as exempt from GST under Division 81 of the GST Act. The Pool safety certificate is listed as an exempt fee and charge on the Treasurers determination at item 7.1 of the relevant chapter.

On the Queensland government website it provides a fact sheet entitled "Tips for pool safety Inspectors. It advises on this publication that:

· "the inspector has an absolute obligation to provide a certificate as required under section 246AA of the Building Act 1975 whether or not the inspector has been paid."

The pool safety certificate states that the pool safety inspector has inspected the regulated pool and is satisfied that the pool is a complying pool under the Building Act 1975.

The following facts have been obtained from the 'Queensland Government Department of Local Government and Planning' website:

The PSC is established under the Building Act 1975 as an independent body to oversee the pool safety inspector licensing system. Its functions include:

· licensing, auditing, investigating and, where necessary, disciplining pool safety inspectors

· approving pool safety inspector courses

· auditing and, where necessary, disciplining course providers

· making pool safety certificate identification numbers available for purchase by pool safety inspectors.

The department provides a secretariat service for the Pool Safety Council. The Pool Safety Council does not represent the state.

As there are no agreements between you and the PSC, we have referred to the Building Act 1975 Chapter 8 Swimming Pool Safety for information regarding the issuing of Pool Safety Certificates;...

Section 246AA; if a pool safety inspector inspects a regulated pool and the inspector is reasonably satisfied the pool is a complying pool, then the pool inspector has an obligation to provide the pool owner a pool safety certificate within 2 business days.

Section 246AJ provides that:

· the PSC must make available for purchase by pool safety inspectors indentifying numbers for pool safety certificates that are unique to each certificate.

The fee for an identification number for a pool safety certificate is the fee prescribed under a regulation (currently $31)

A pool safety inspector must, when giving a pool safety certificate, assign to the certificate an identification number.

Section 246AK provides the pool safety certificate for a regulated pool must be in the approved form, have an identification number; and be signed by the pool safety inspector giving the certificate.

246AH provides that (a) if the owner of a regulated pool asks the local government to inspect the pool for the giving of a pool safety certificate for the pool (b) the local government must appoint or employ a pool safety inspector to conduct the inspection of the pool.

Relevant legislative provisions

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

Reasons for decision

The A New Tax System (Goods and services Tax) Act 1999 (GST Act) sets out at section 7-1 that GST is payable on taxable supplies and at section 9-40 of the GST Act that you must pay the GST payable on any taxable supply you make.

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

(a) you make the supply for consideration

(b) the supply is made in the course or furtherance of an enterprise that you carry on

(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.

For your supply of services to be a taxable supply, all of the requirements in section 9-5 of the GST Act must be satisfied and must not be excluded because the supply is either GST-free or input taxed.

In your case

You receive payment from the pool property owner for your supply of the pool safety inspection, which includes providing a pool safety certificate.

The supply of the pool inspection is made in the course or furtherance of your enterprise.

It is connected with Australia and

You are registered for GST

In addition there is no provision of the GST Act that would make your supplies of the pool inspection and pool certificates input taxed or GST-free.

You agree that the supply of your pool inspection is a taxable supply; however you are uncertain about the supply of the pool safety certificate. You have advised that the supply of the Pool safety certificate to you is GST exempt as it is supplied by the Queensland Government.

Under Division 81 of the GST Act the payment of any Australian Tax fee or charge that is specified by legislative instrument, by the Treasurer or the discharging of a liability to make such a payment is not the provision of consideration. The Pool safety certificate is listed as an exempt fee and charge on the Treasurers determination at item 7.1 of the relevant chapter.

In this case the pool certificate is issued by the government department to you after you input details into their database and pay for the certificate. You then print the completed form and send the signed certificate to the property owner.

For the supply of the pool safety certificate to retain its GST status when supplied to the pool owner, we need to consider if an agency relationship exists between you and your client. If there is no agency relationship then the supply of certificate would be made to you in the course of your enterprise.

An agency relationship is where one party (the principal), either expressly or impliedly, consents that another party (the agent) should act on the principals behalf.

In most cases the contractual relationship between the parties is used to determine whether or not there is an agency relationship.

Goods and Services Tax Ruling GSTR 2000/37 (entitled 'Goods and services tax: agency relationships and the application of the law') deals with agency relationship and disbursements. Paragraphs 48 and 49, provides clarification on agency relationships.

'Agency relationship and disbursements

48 Agents may incur expenses on a client matter both as an agent of the client and as a principal in the ordinary course of providing their services to the client. For example, in most cases, even though agreements between solicitors and clients may not use the term agent or agency, it is clear that the clients have authorised the solicitors to act on their behalf in the particular matter. When the solicitor acts as an agent for the client, the general law of agency applies so that the solicitor is standing in the shoes of the client. 

49 If a disbursement is made by a solicitor and incurred in the solicitors capacity as a paying agent for a particular client, then no GST is payable by the solicitor on the subsequent reimbursement by the client. This is because the goods or services to which the disbursement relates are supplied to the client, not to the solicitor, by a third party. Also, the reimbursement forms no part of the consideration payable by the client for the supply of services by the solicitor. However, if goods or services are supplied to the solicitor to enable the solicitor to perform services supplied to the client, GST is payable by the solicitor on any reimbursement by the client of expenses incurred on those goods or services, whether the reimbursement is separately itemised or included as part of the solicitors overall fee. This is because the reimbursement is part of the consideration payable by the client for services supplied by the solicitor.' 

It is important to note the difference between these two examples. The client in the first instance has an interest in paying for your services. Your services would include various outgoings incurred in the course of providing those services.

In the second instance, the client is obtaining your services to obtain the results of services from a third party (the government agency); this is in effect their primary interest. The difference is that in the first instance the applicant's office acts in its own right to acquire the services of the government agency to facilitate its provision of services. In the second instance the entity is acting as a paying agent for the client in acquiring the services of the government agency.

In your case there are no contracts between your client and yourself to indicate an agency relationship exists. While the Building Act 1975 provides that you have an absolute obligation to provide a pool safety certificate to a pool owner, it states that it is the pool safety inspector who must purchase the identification number, which is then assigned to a certificate that you must sign and give to the pool owner.

We consider that the payment for the pool safety certificate is incurred by you in your own right to enable you to perform services for the client. Therefore the supply of the pool certificate will meet the definition of a taxable supply as the payment for the certificate by your clients is consideration for your supply of the Pool safety certificate.

In summary when you pay the cost for the pool safety certificate, you recover those costs when you provide your services to the client, the on-charged cost of the pool safety certificate will be subject to GST.