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Ruling

Subject: GST and Division 81

Question 1

From 1 July 20XX, are you liable for goods and services tax (GST) in relation to the information that you provide?

Answer

No, from 1 July 20XX, you are not liable for GST in relation to the information that you provide.

Question 2

From 1 July 20XX, are you liable for GST in relation to your supplies of services?

Answer

Yes, from 1 July 20XX, you are liable for GST in relation to your supplies of services.

Relevant facts and circumstances

You are an Australian government agency that is registered for GST.

You received a private ruling prior to June 20XX in relation to a number of supplies that you make. Some of these supplies are included in your current private ruling request. You are requesting these supplies to be ruled upon again, due to the amendment to the A New Tax System (Goods and Services Tax) Regulations 1999.

You perform your functions and undertake your activities under a State law.

Your supplies are made in the course or furtherance of an enterprise that you carry on and are connected with Australia. You charge fees for your supplies.

You are able to enter into commercial arrangements for some of your supplies.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Subsection 7-1(1)

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

A New Tax System (Goods and Services Tax) Act 1999 Section 9-39

A New Tax System (Goods and Services Tax) Act 1999 Division 81

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) Act 1999 Subsection 81-10(1)

A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(2)

A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(5)

A New Tax System (Goods and Services Tax) Act 1999 Section 81-15

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

A New Tax System (Goods and Services Tax) Regulations 1999 Subregulation 81-10.01(1)

A New Tax System (Goods and Services Tax) Regulations 1999 Paragraph 81-10.01(1)(f)

A New Tax System (Goods and Services Tax) Regulations 1999 Paragraph 81-10.01(1)(g)

A New Tax System (Goods and Services Tax) Regulations 1999 Paragraph 81-15.01(1)(f)

Reasons for decision

Question 1

Summary

From 1 July 20XX you are not liable for GST in relation to your supplies of the information that you provide because the fees and charges received for these services do not constitute consideration:

Detailed reasoning

Unless otherwise stated, all legislative references in this Ruling are to the A New Tax System (Goods and Services Tax) Act 1999 and all references to the regulations are to the A New Tax System (Goods and Services Tax) Regulations 1999.

Subsection 7-1(1) provides that GST is payable on taxable supplies. A supplier will make a taxable supply if all of the requirements of section 9-5 are met.

Section 9-5 states:

You make a taxable supply if:

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

(b)  the supply is made 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.

*denotes a defined term in section 195-1 of the GST Act.

As you are registered for GST and provide services in carrying on your enterprise in Australia, the issue that arises under section 9-5 is whether such services are supplies for consideration.

However, section 9-39 provides special rules in relation to making taxable supplies. In particular, item 8 in the table in section 9-39 provides that where there is a payment of taxes, fees and charges the special rules in Division 81 may apply.

Section 81-5 considers the effect of the payment of a tax. However, we do not consider the services in question to be taxes.

Section 81-10 considers the effect of certain fees and charges and states:

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.

The term 'Australian fee or charge' is defined in section 195-1 as:

Australian fee or charge means a fee or charge (however described), other than an Australian tax, imposed under an *Australian law and payable to an *Australian government agency.

We consider that the relevant fees or charges for the services that you provide are imposed under a state law and therefore, are imposed under an Australian law.

The payment of fees and charges in relation to the services in question, come under subsection 81-10(5). Therefore, subsection 81-10(1) applies to make them 'not the provision of consideration'.

However, subsection 81-10(2) provides that the payment of a fee or charge will be treated as consideration if it is prescribed by the regulations. The fees and charges that are prescribed for the purposes of subsection 81-10(2) are provided in subregulation 81-10.01(1).

Of relevance to this ruling is paragraph 81-10.01(1)(f) which provides that a fee or charge for the provision of information by an Australian government agency that is of a non-regulatory nature will constitute consideration.

We consider that the services in question are regulatory in nature. Therefore, paragraph 81-10.01(1)(f) is not applicable to the fees and charges for these services and as such, they are not a prescribed fee or charge under subsection 81-10(2).

Therefore, the fees and charges received in relation to these services do not constitute consideration. As such, these supplies are not taxable supplies and consequently, you are not liable for GST in relation to them.

Question 2

Summary

From 1 July 20XX, you are liable for GST in relation to your supplies of services because the fees and charges received for these services do constitute consideration.

Detailed reasoning

Based on the available information, the fees and charges received for the services you provide are not excluded from being consideration under subsection 81-10(1). Therefore, it is necessary to consider whether such fees and charges are prescribed by the regulations so as to be treated as the provision of consideration under subsection 81-10(2).

Of relevance is paragraph 81-10.01(1)(g) which provides that a fee or charge for a supply of a non-regulatory nature is prescribed.

The explanatory statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No.2) (ES) gives Parliament's intent of the term 'regulatory' and states:

The term 'regulatory' captures those supplies made by a government agency, where that agency is legislatively empowered to make the relevant supply and the supply is to satisfy a regulatory purpose.

Additionally, the ES states the following in relation to paragraph 81-10.01(1)(g):

This paragraph ensures that the non-regulatory activities of government are subject to GST. This paragraph applies to supplies of goods and services for which fees are imposed where the consumer is provided with something that lacks a regulatory character. That is, the fee or charge does not arise under an Australian law which is intended, for example, to regulate behaviour, ensure consumer protection and ensure compliance with certain standards. The paragraph applies even though it may be the sole responsibility of a government agency to supply the goods or services for which the fees are imposed, and such supplies are in the public interest.

You are able to enter into commercial arrangements where you can enter into contracts or arrangements for the supply of your services.

The services in question have a commercial nature and lack a regulatory character. Therefore, as the fees and charges received for these services are not for a supply of a 'regulatory' nature then they must be for a supply of a 'non-regulatory' nature. As such, these fees and charges are prescribed by the regulations and thus, will be treated as the provision of consideration in accordance with subsection 81-10(2).

In contrast to certain fees and charges being prescribed as consideration for a supply, other fees and charges can be prescribed as not being consideration for a supply. Section 81-15 states:

81-15 Other fees and charges that do not constitute consideration

The regulations may provide that the payment of a prescribed *Australian fee or charge, or of an Australian fee or charge of a prescribed kind, or the discharging of a liability to make such a payment, is not the provision of *consideration.

Of relevance is paragraph 81-15.01(1)(f) which provides that a fee or charge for a supply of a regulatory nature made by an Australian government agency is prescribed.

However, as determined above the fees and charges received for your services are not for a supply of a regulatory nature. Therefore, they are not prescribed under section 81-15 to 'not constitute consideration' by virtue of paragraph 81-15.01(f).

Accordingly, the fees and charges you receive for the services will be consideration for the supply of these services.

Therefore, as there is nothing in the GST Act that would make these supplies GST-free or input taxed and the other requirements of section 9-5 are satisfied, the supplies of these services will be taxable supplies for which you will be liable for GST.