Edited version of your private ruling

Authorisation Number: 1012460390969

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Ruling

Subject: GST and the application of Division 81 in relation to Australian fees and charges

Question

Does Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) apply to make payment of the fees or charges listed in Table 1 not the provision of consideration?

Table 1 lists a number of fees.

Answer

Under Division 81 of the GST Act payment of the relevant fees or charges is exempt from GST where indicated in columns D and E of Table 2 below.

Where column C indicates the fee or charge is listed in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charge) Determination 2011 (no.1) (Treasurer's Determination) that fee or charge is exempt from GST from 1 July 2012 to 30 June 2013. This is because of the grandfathering rules.

This ruling applies for the following periods:

1 July 2012 onward

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, a government agency (G1) are the representative member of a GST group which includes government agency 2 (G2).

You impose a range of fees for certain services that you provide.

Relevant legislative provisions

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

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

The A New Tax System (Goods and Services Tax) Act 1999 Section 9-15

The A New Tax System (Goods and Services Tax) Act 1999 Section 9-40

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

The A New Tax System (Goods and Services Tax) Regulations 1999

Reasons for decision

Detailed reasoning

These reasons for decision accompany the Notice of private ruling for G1.

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

In this ruling, unless otherwise stated,

· all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).

· all reference materials referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au

In providing advice for this ruling we will address the following issues:

a. Taxable supply

b. Meaning of 'consideration'

c. Australian Tax

d. Australian fee or charges

e. Provisions of Division 81 and regulations made under the Division

f. Application of Division 81 and regulations made under the Division

g. Summary of fees or charges that are excluded from GST

1. Taxable supply

Section 9-40 states that an entity must pay the GST payable on any taxable supply that the entity makes.

Section 9-5 provides:

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.

Note: The terms marked with an asterisk are defined in section 195-1.

Paragraph 9-5(a) requires that the supply is made for 'consideration'. In this instance, it is relevant to consider whether payment of the fees or charges listed in Table 1 satisfies the meaning of 'consideration' for GST purposes.

2. Meaning of 'consideration'

Section 195-1 states:

consideration, for a supply or acquisition, means any consideration, within the meaning given by sections 9-15 and 9-17, in connection with the supply or acquisition.

Subsection 9-15(1) provides:

(1) Consideration includes:

(a) any payment, or any act or forbearance, in connection with a supply of anything; and

(b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything.

The special rules in Division 81 provide for the payment of certain taxes, fees and charges to be treated as not the provision of 'consideration' and for this reason such a payment is exempt from GST.

Section 81-20 states that this Division has effect despite sections 9-15 and 9-17 (which are about consideration).

Accordingly, we need to consider the application of Division 81 to the payment of the relevant fees and charges.

3. Australian Tax

Subsections 81-5(1) and (2) provide:

Australian tax 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 tax.

Regulations may provide for exceptions

(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 tax that is, or is of a kind, prescribed by the regulations.

Currently, for the purposes of subsection 81-5(2), the GST Regulations do not prescribe any payment.

Section 195-1 defines an Australian tax to mean a tax (however described) imposed under an Australian law. An Australian law means a Commonwealth law, a State law or a Territory law.

Broadly, we consider a tax is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered.

On the facts provided, we consider each of the fees or charges in question does not have the characteristics or features of an Australian tax. The fees or charges fall within the concept of a 'fee for service' rather than a tax.

Accordingly, consideration must be given as to whether the fees or charges are 'Australian fees or charges'.

4. Australian fee or charge

It is relevant to consider the definition of the following terms:

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 government agency has the meaning given by section 995-1 of the Income Tax Assessment Act 1997 which states that an Australian government agency means:

(a) the Commonwealth, a State or a Territory; or
(b) an authority of the Commonwealth or of a State or a Territory.

As noted, the definition of an Australian fee or charge includes that it is:

· a fee or charge (however described), other than an Australian tax

· imposed under an Australian law

· payable to an Australian government agency.

As determined earlier, each of the relevant fees or charges is not an Australian tax. Therefore, we need to consider the law under which the fees or charges is imposed, and whether the relevant fees or charges are payable to an Australian government agency.

On the facts provide, we have summarised the law under which each of the fees or charges is imposed, and the entity to which the fee or charge is payable, as shown in Table 3 below.

For ease of reference, we have also included a column in the table to indicate whether the fee or charge is listed in the Treasurer's Determination.

Table 3 lists the law under which each of the fees or charges is imposed and the entity to which each of the fees or charges is payable.

As noted from the summary in Table 3, each of the fees or charges is:

· imposed by a law of a particular State. That is, imposed under an Australian law.

· payable to either G1 or G2.

We accept that G1 and G2 being agencies of the particular State meet the definition of an Australian government agency for the purposes of the GST legislation. Further, we accept that the relevant Act in column D in Table 3 gives the power or authority to charge the relevant fees or charges. Accordingly, each of the relevant fees or charges is an Australian fee or charge.

We will apply Division 81 to each of the Australian fees or charges.

5. Provisions of Division 81 and regulations made under the Division

Division 81-Payments of taxes, fees and charges

...

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.

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 GST Regulations for Division 81 provide:

Division 81 Taxes, fees and charges

81-10.01 Fees and charges which constitute consideration

(1) For subsection 81-10 (2) of the Act, the following kinds of Australian fee or charge are prescribed:

(a) a fee for parking a motor vehicle in a ticketed or metered parking space;

(b) a toll for driving a motor vehicle on a road;

(c) a fee for hire, use of, or entry to a facility, except for an entry fee to a national park;

(d) a fee for the use of a waste disposal facility;

(e) a fee for pre-lodgment advice if:

(i) the advice relates to an application to which subsection 81-10 (4) of the Act applies; and

(ii) it is not compulsory to seek the advice;

(f) a fee or charge for the provision of information by an Australian government agency if the provision of the information is of a non-regulatory nature;

(g) a fee or charge for a supply of a non-regulatory nature;

(h) a fee or charge for a supply by an Australian government agency, where the supply may also be made by a supplier that is not an Australian government agency.

(2) Despite subregulation (1), a fee or charge, the payment of which is covered by subsection 9-17 (3) or (4) of the Act, is not a prescribed fee or charge.

81-15.01 Fees and charges which do not constitute Consideration

(1) For section 81-15 of the Act, the following kinds of Australian fees and charges are prescribed:

(a) a fee or charge for:

(i) the kerbside collection of waste; or

(ii) the supply, exchange or removal of bins or crates used in connection with kerbside collection of waste;

(b) royalties charged in relation to natural resources;

(c) a fee or charge imposed on an industry to finance regulatory or other government activities connected with the industry;

(d) a fee or charge to compensate an Australian government agency for costs incurred by the agency in undertaking regulatory activities;

(e) a fee or charge imposed in relation to a court, tribunal, commission of inquiry or Sheriff's office;

(f) a fee or charge for a supply of a regulatory nature made by an Australian government agency;

(g) a fee or charge for entry to a national park;

(h) any other fee or charge:

(i) specified in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 1), as in force immediately before the commencement of Schedule 4 to the Tax Laws Amendment (2011Measures No. 2) Act 2011; and

(ii) imposed before 1 July 2013.

(2) In this regulation:

waste includes green waste and recyclables.

81-15.02 Fees and charges covered by regulations 81-10.01 and 81-15.01

(1) The payment of a fee or charge covered by both paragraph 81-10.01(1)(g) and regulation 81-15.01, or the discharge of a liability to pay the fee or charge, is not to be treated as the provision of consideration.

(2) The payment of a fee or charge covered by both paragraph 81-10.01(1)(a), (b), (c), (d), (e), (f) or (h) and regulation 81-15.01, or the discharge of a liability to pay the fee or charge, is to be treated as the provision of consideration.

(3) However, payment of a fee or charge covered by both regulations 81-10.01 and 81-15.01, or the discharge of a liability to pay the fee or charge, is not to be treated as the provision of consideration if the fee or charge:

(a) is specified in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 1), as in force immediately before the commencement of Schedule 4 to the Tax Laws Amendment (2011 Measures No. 2) Act 2011; and

(b) was imposed before 1 July 2013.

6. Application of Division 81 and the GST Regulations

Information A

Subsection 81-10(1) states that payment of an Australian fee or charge that is of a kind covered by subsection 81-10(4) or (5) is not the provision of consideration.

However, subsection 81-10(2) includes that a GST Regulation can be made to treat the payment of an Australian fee or charge as the provision of consideration for a supply.

G1 makes available the information referred to as Information A to government and non government entities for a fee.

In applying Division 81 we consider the fee for Information A is covered under subsection 81-10(5) as G1 allows access to this information. This means payment of the fee will satisfy subsection 81-10(1) and will not be the provision of consideration, unless subsection 81-10(2) applies.

Subsection 81-10(2) narrows the operation of subsection 81-10(1) by providing that the payment of certain fees and charges prescribed by the GST Regulations made for subsection 81-10(2) is to be treated as the provision of consideration for a supply. We consider that subsection 81-10(2) of the GST Act does not apply to the fee for Information A because this fee or charge is not prescribed in GST sub-regulation 81-10.01(1).

Therefore the payment of the fee for Information A is not the provision of consideration under subsection 81-10(1). As such, the relevant fee will be exempt from GST.

Additional information

Where Information A is supplied to a government entity for a fee, sub-regulation 81-10.01(2) may apply to make the fee potentially not subject to GST. That is, payment of the fee will not constitute consideration if the relevant requirements under Division 9-17 are satisfied. Division 9-17 includes certain payments made by a government related entity to another government related entity as not the provision of consideration.

Fees in relation to Information B

G1 is providing access to the relevant information which can only be provided through Information B. We consider the fees for the provision of Information B are covered under subsection 81-10(5). This means payment of the fees is not the provision of consideration under subsection 81-10(1), unless subsection 81-10(2) applies in that the fees are prescribed by the GST Regulations.

For section 81-10(2), the fee for Information B is not prescribed in GST Regulation 81-10.01. That is, subsection 81-10(1) will apply.

As the fee for Information B is regulatory in nature paragraph 81-15.01(f) applies to make payment of the fee not the provision of consideration under section 81-15.

Accordingly, under both subsection 81-10(1) and section 81-15, payment of the below fees are not the provision of consideration. Accordingly, the fees in relation to Information B are exempt from GST.

Fees charged by G1 for information that may be provided by a specific entity

G1 allows a specific entity access to its registers in order to provide information to third parties on the basis that they comply with the agreement entered into. The specific entity will charge its users a fee for the information extracted from the registers maintained by G1 that the entity provides to its customers.

G1 also charges fees for access to information on the registers that G1 maintains.

You state that these fees are currently listed on the Treasurer's Determination.

In applying Division 81 to the relevant fees we consider that the fee will be covered by subsection 81-10(5) as G1 is providing access to information on its registers. Accordingly, subsection 81-10(1) will apply to make payment of the fees as not the provision of consideration. This is provided subsection 81-10(2) does not apply. That is, the relevant fee or charge is not prescribed in the GST Regulations made for this subsection.

The GST Regulations for subsection 81-10(2) at paragraph 81-10.01(1)(h) states that a fee or charge for a supply by an Australian government agency, where the supply may also be made by a supplier that is not an Australian government agency.

In this case, even though the supply of the same information can also be made by G1 to a specific entity with the potential of paragraph 81-10.01(1)(h) applying, the ES specifically identifies that:

...This paragraph does not cover supplies of information that are regulatory in nature and can only be supplied by government agencies, notwithstanding that the public may obtain such information through a private sector supplier acting as a conduit for the information from the government agency. The supply is only a taxable supply where the private sector entity charges for the supply in its own right.

On the basis of the explanation in the ES, we consider the fee for supplies of information made by G1 is not of the kind prescribed in paragraph 81-10.01(1)(h). This is because when the specific entity provides the information to third parties, they are merely acting as a conduit for the information from G1.

Accordingly, subsection 81-10(2) does not apply and payment of the fee will not be the provision of consideration. That is, the relevant fees that are charged by G1 for access to information that can also be charged by a specific entity will be exempt from GST.

Service fees

On the facts provided, Company C will access the services from the register that G1 maintains.

We consider that in allowing access to the various information on the register, G1 is undertaking some of the activities listed in paragraphs 81-10(5)(a) to (g). Accordingly, subsection 81-10(1) applies and the payment of these fees are not the provision of consideration, unless subsection 81-10(2) applies.

We consider that subsection 81-10(2) of the GST Act does not apply because these fees or charges are not prescribed in GST sub-regulation 81-10.01(1).

As subsection 81-10(2) does not apply, the payment of the relevant fees will not be the provision of consideration. As such, the fees are exempt from GST

G2 Fees and Charges

We consider each of the relevant fees satisfies section 81-10(4) as they relate to, or relate to an application for, the provision of a permission to become or remain as a registered professional. Therefore, payment of each of the specified fees is not the provision of consideration under subsection 81-10(1), unless subsection 81-10(2) applies in that the fees are prescribed in the GST Regulations made for this subsection.

For subsection 81-10(2), regulation 81-10.01 does not apply. Therefore, the fees do not constitute consideration.

In addition, paragraph 81-15.01(1)(f) 'a fee or charge for a supply of a regulatory nature made by an Australian government agency' is satisfied. Therefore, the fees also do not constitute consideration by virtue of this provision.

Accordingly, GST does not apply and the fees will not be subject to GST under section 81-10 and 81-15.