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Ruling

Subject: GST and the supply of goods

Question

Is the supply of goods, from 1 July 2013, exempt from GST under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the supply of goods, from 1 July 2013, is exempt from GST under Division 81 of the GST Act

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 a Government agency.

Relevant legislative provisions

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

Reason's for Decision

Division 81 was amended with effect from 1 July 2011 to allow entities to self assess the GST treatment of a payment of an Australian tax or an Australian fee or charge in accordance with certain principles.

Under the transitional arrangements, those Australian taxes, fees and charges that were not subject to GST under the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No.1) (the Treasurer's Determination), remain not subject to GST until 30 June 2013 and thereafter will be assessed under Division 81 of the GST Act as amended.

The GST treatment of all Australian taxes or Australian fees or charges that were not listed in the Treasurer's Determination will be self assessed under the changes made to Division 81 of the GST Act with effect from 1 July 2011.

From 1 July 2013 goods will be assessed under Division 81 of the GST Act as amended.

Sections 81-10 and 81-15 of the GST Act consider the effect of certain fees and charges and state:

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, it 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.

(1) 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.

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.

The term 'Australian fee or charge' is defined in section 195-1 of the GST Act 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.

Australian Law

The term 'Australian law' is defined by section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) and relevantly includes a State law.

An Australian law includes Acts and law making powers which are delegated by parliaments, such as regulations, by-laws, proclamations and orders made under Acts.

Australian Government Agency

The term 'Australian government agency' is defined by section 995-1 of the ITAA 1997. 'Australian government agency' means:

· the Commonwealth, a State or Territory; or

· an authority of the Commonwealth or of a State or a Territory.

For the purposes of Division 81 of the GST Act, it is accepted that you come within the definition of an Australian government agency.

GST Regulations

Regulation 81-15.01 of the GST Regulations sets out those fees and charges that are prescribed for section 81-15 and which do not constitute consideration. Paragraph 81-15.01(1)(f) of the GST Regulations refers to 'a fee or charge for a supply of a regulatory nature made by an Australian government agency'.

The term 'regulatory nature' is not defined in the GST Regulations or the GST Act. The explanatory statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No. 2) (ES) 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.

In some instances, although the consumer acquires something that may be of intrinsic value to the consumer, the acquisition is made in the context of satisfying a regulatory requirement of an Australian law…

Regulation 81-10.01 of the GST Regulations sets out Australian fees and charges that are prescribed fees and charges treated as consideration for subsection 81-10(2). Goods are not treated under regulation 81-10.01 of the GST Regulations.

Therefore, it is considered that fees for goods are for a supply of a regulatory nature. This supply is made by an Australian government agency and is therefore exempt as a result of section 81-15 of the GST Act.