Edited version of your private ruling

Authorisation Number: 1012469429974

Ruling

Subject: Goods and services tax (GST) treatment of various fees and charges

Question 1

Are the following fees and charges taxable (for past and future supplies)?

· Application fee (and late application fee) to take an examination

· Local expenses fee

· Reassessment fee

· Script inspection fee

· Application fee (and late application fee) for declaration of eligibility to take a skills test

· Fee for copy of a certificate

· Review fee

· Verification fee

· Application fee for a decision on equivalence of level of education of qualification (for interstate and overseas education and qualifications)

· Service fee

· Administration fee

· Application fee for accreditation or renewal of accreditation for syllabus or guideline

Answer

From 1 July 2013 all of your fees outlined above are not subject to GST.

The correct GST treatment of each fee for the 2012 and 2013 income years is considered below:

Application fee (and late application fee) to take an examination

· GST-free at all relevant times

Local expenses fee

· GST payable only on supplies made prior to 1 July 2012

Reassessment fee

· GST payable only on supplies made prior to 1 July 2012

Script inspection fee

· Not subject to GST from 1 July 2011

Application fee (and late application fee) for declaration of eligibility to take a core skills test

· GST-free at all relevant times

Fee for copy of a certificate

· Not subject to GST from 1 July 2011

Review fee

· GST payable only on supplies made prior to 1 July 2012

Verification fee

· GST payable only on supplies made prior to 1 July 2012

Application fee for a decision on equivalence of level of education of qualification (for interstate and overseas education and qualifications)

· GST-free at all relevant times

Service fee

· GST payable only on supplies made prior to 1 July 2012

Administration fee

· The administration fee treatment is the same as the GST treatment of the underlying supply.

Application fee for accreditation or renewal of accreditation for syllabus or guideline

· Not subject to GST at all relevant times

Question 2

For those fees and charges that were not taxable when GST was paid, should you claim back the GST and refund the GST to the customers?

Answer

You may only claim a refund of the overpaid GST where you first reimburse a corresponding amount to the recipients of your supplies.

Relevant facts and circumstances

· You are a statutory authority of a State Government established under relevant legislation.

· You provide syllabuses, guidelines, assessment, reporting, testing, accreditation, certification and tertiary entrance services for schools and students

· You also provide senior external examinations. The senior external examination consists of individual subject examinations provided across the State. Candidates may be able to use senior external examination results to gain an education certificate and therefore meet tertiary entrance or employment requirements.

· You are also governed by the Regulations made under the relevant Act.

· You have provided a table detailing each of the fees. This details how you have treated the fees (for the 2012 and 2013 income years), and how you now think they should be treated (post 1 July 2013).

· Only the fee for accreditation of a syllabus was listed in the A New Tax System (Goods and Services Tax)(Exempt Taxes, Fees and Charges) Determination 2011 (No 1) (Cth) (the Determination).

· The fees are as follows:

Application fee (and late application fee) to take an examination

· A person who wishes to take an external senior examination for an examination subject must apply to you to take the examination. The fee is imposed under the Regulations.

· From 1 July 2011 you have treated these fees as GST-free under section 38-110 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and intend to continue to treat the supply as GST-free under this provision. You also consider that from 1 July 2012 paragraph 81-15.01(1)(f) of the GST Regulations would apply to exempt the fee from being consideration for any supply.

Local expenses fee

· A person taking an external senior examination for an examination subject may apply to you to take the examination at an alternative place when they apply and pay the local expenses fee.

· The local expenses fee is the amount that you consider to be reasonable, and is not more than the reasonable cost of providing the examination at the alternative place. It is imposed under the Regulations.

· From 1 July 2011 to 30 June 2012 you treated this fee as taxable. From 1 July 2012 onwards you have treated this supply as not subject to GST, because you consider paragraph 81-15.01(1)(d) of the GST Regulations applies.

Reassessment fee

· A person who has taken an external senior examination for an examination subject may ask you to reassess the person's level of achievement for the subject stated in the relevant statement of results. The fee is imposed under the Regulations for each examination subject

· You treated this fee as taxable from 1 July 2011 until 30 June 2013. However, you consider this fee should have been treated as exempt under subsection 81-10(5)(f) of the GST Act for this period, and should continue to be treated as exempt.

Script inspection fee

· A person who has taken an external senior examination for an examination subject may ask you for permission to inspect the person's graded examination script. The fee is imposed under the Regulations.

· You treated this fee as taxable from 1 July 2011 until 30 June 2013. However, you believe it should have been treated as exempt under subsection 81-10(5)(d) of the GST Act for this period, and that it should continue to be treated as exempt.

Application fee (and late application fee) for declaration of eligibility to take a skills test

· A person may apply to you to be declared eligible to take a skills test. The fee is imposed under the Regulations.

· From 1 July 2011 you have treated these fees as GST-free under section 38-110 of the GST Act and intend to continue to treat the supply as GST-free on this basis. You also consider that from 1 July 2012 paragraph 81-15.01(1)(f) of the GST Regulations would apply to exempt the fee from being consideration for any supply.

Fee for copy of a certificate

· You must issue a copy of a person's certificate to them when it is requested in writing and a fee is paid. The fee is imposed under the Regulations.

· You have not charged GST from 1 July 2011 as you consider that the fee is not taxable under section 81-10(5)(d) of the GST Act as it is a fee for requesting a copy of information.

Review fee

· A person who receives their entrance statement from you may apply to you for a review of the information in the statement. The fee for this is imposed under the Regulations.

· You have charged GST on this fee for the period 1 July 2011 to 30 June 2013. However, you consider this fee should have been treated as exempt under Division 81 (subsection 81-10(5)(f)) of the GST Act for this period, and should continue to be treated as exempt under this provision.

Verification fee

· A person who is issued with a certificate of individual achievement or statement of results may apply to the authority for verification of information in the certificate or statement. This fee is imposed under the Regulations.

· You have charged GST on this fee for the period 1 July 2011 to 30 June 2013. However, you consider this fee should have been treated as exempt under subsection 81-10(5)(f) of the GST Act for this period, and should continue to be treated as exempt.

Application fee for a decision on equivalence of level of education of qualification (for interstate or overseas education and qualifications)

· A person may apply to you for a decision on the equivalent level of school education qualification (for your State) of an education or qualification obtained outside your State. This fee is imposed under the Regulations.

· You have treated these fees as GST-free under section 38-110 of the GST Act and intend to continue to treat the supply as GST-free on this basis. You also consider that from 1 July 2012 paragraph 81-15.01(1)(f) of the GST Regulations would apply to exempt the fee from being consideration for any supply.

Service fee

· This fee applies to a person who is undertaking senior secondary education at an assessing school and is not an Australian citizen or permanent resident. The person must pay you a service fee for you performing your functions. This fee is imposed under the Regulations.

· You have charged GST on this fee for the period 1 July 2012 to 11 March 2013. An amount of GST was collected in this time. However, you consider that from 1 July 2012 the fee should be exempt under regulation 81-15.01(1)(f) of the GST Regulations.

Administration fee

· You allow a refund of a number of different fees (for example application fees, local expenses fees and script inspection fees) in certain circumstances. Where you allow a refund, you refund the amount of the fees less an administration fee. The administration fees are imposed under the Regulations.

· You have treated these fees as GST-free under section 38-110 of the GST Act as you consider that the supply relates to the assessment of qualifications. You intend to continue to treat the supply as GST-free on this basis. You also consider that from 1 July 2012 paragraph 81-15.01(1)(f) of the GST Regulations would apply to exempt the fee from being consideration for any supply.

Application fee for accreditation or renewal of accreditation for syllabus or guideline

· An application for accreditation of a syllabus or guideline must be accompanied by an application fee. This fee is imposed under the Regulations. Similarly, an application for renewal of a syllabus or guideline must also be accompanied by an application fee (imposed by the Regulations).

· The person who owns the syllabus or guideline (or a person authorised by the owner) may apply for the accreditation or renewal.

· This fee has been treated as exempt under the Determination. From 1 July 2013 you consider that paragraph 81-15.01(1)(f) of the GST Regulations would apply to exempt the fee from being consideration for any supply.

GST paid

· You have also provided a table showing the GST you have paid in respect of the various fees.

· You have paid GST in respect of service fees for 2012-13.

· You have paid an amount in 2011-12, and an amount in 2012-13, in respect of reassessment fees.

· You have paid an amount in 2011-12 in respect of script inspection fees.

· You have paid an amount in 2011-12, and another amount in 2012-13, in respect of review fees and verification fees (combined, you do not distinguish between these fees in your accounts).

· Your fees are considered to be GST-inclusive where applicable (GST (if any) is included). That is, you do not charge an additional amount for GST. GST is incorporated in the fees where applicable.

Relevant legislative provisions

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

Section 9

Division 81

Reasons for decision

Question 1

Summary

From 1 July 2013 all of your fees outlined in this private binding ruling are not subject to GST. The correct GST treatment in the 2012 and 2013 income years for each fee is considered below.

Detailed reasoning

GST is payable on taxable supplies. Section 9-5 of the GST Act provides that 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, a supply is not a taxable supply to the extent that it is GST-free or input taxed.

Also, relevant to your circumstances, chapter 4 of the GST Act contains special GST rules that apply in particular circumstances. The special rules modify the application of the basic GST rules. Rules in Division 81 of the GST Act provide that certain payments to Australian government agencies are not the provision of consideration. The application of this Division must be considered in your circumstances.

When the GST was introduced the Commonwealth, states and territories agreed that the GST would apply to the commercial activities of government at all levels, but that the non-commercial activities of government would be outside the scope of the GST. Division 81 of the GST Act gives effect to this agreement.

Until 1 July 2011, various exemptions were set out in detail in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 1) (the Determination). To be exempt under Division 81 a fee or charge needed to be specifically listed.

From 1 July 2011 it is no longer necessary for a fee to be listed on the Determination in order to be exempt. Division 81 of the GST Act was amended as of 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.

As a transitional measure, fees and charges listed in the Determination as at 30 June 2011 remain exempt until 1 July 2013. Your fees for accreditation of a syllabus or guideline (and accreditation renewal) are the only fees that were covered by the Determination.

The amended Division 81 provides that the payment of certain Australian fees and charges are not consideration. Regulations pursuant to Division 81 have also been made, with effect from 1 July 2012, that specifically include or exempt certain payments from being the provision of consideration (see regulations 81-10.01 and 81-15.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).

Australian fee or charge

As a starting point, it is necessary to determine whether the fees or charges described meet the specific requirements of an Australian tax, fee or charge before the further substantive requirements of Division 81 and the regulations made under Division 81 can be considered.

An Australian fee or charge is a fee or charge (however described), imposed under an Australian law and payable to an Australian government agency (section 195-1 GST Act).

An Australian law means a Commonwealth, state or territory law. Australian government agency means the Commonwealth, a state or territory, or an authority of the Commonwealth or of a state or territory (section 195-1 GST Act, as defined by reference to section 995-1, Income Tax Assessment Act 1997 (ITAA 1997)). This provides that Australian government agency means the Commonwealth, a State or a Territory, or an authority of the Commonwealth or of a State or a Territory.

You are established as a body corporate under the relevant Act. Under the Act the Minister has the power to give you directions in the public interest and the power to require production of a document. The Act also provides that you are a statutory body under financial accountability legislation, and you are required to report to the Minister on your performance. Your staff, are employed under relevant public service legislation.

We therefore accept that you are a State or an authority of the State for the purposes of Division 81, and therefore also meet the definition of an Australian government agency for the purposes of the Division.

Your Act gives you the authority to impose charges for services you supply. The Act is a state law, and therefore is an Australian law.

As the fees and charges in question are imposed under an Australian law and are payable to an Australian government agency we therefore consider that the fees or charges are Australian fees or charges.

Examination application fee (and late fee),

Equivalent assessment fee, and

Application fee (and late application fee) for declaration of eligibility to take a skills test

You have treated these fees as GST-free from 1 July 2011 under section 38-110 of the GST Act. Section 38-110 of the GST Act relates to recognition of prior learning. A supply is GST-free if the supply is the assessment or issue of qualifications for the purpose of access to education or employment.

Section 38-110 of the GST Act has no application to an assessment made as an integral part of an education course. Such an assessment is an administrative service directly related to the supply of the course.

However, we accept that in these circumstances the examination fees are for the assessment or issue of qualifications for the purposes of access to education or employment. The equivalent qualification fee is also for the assessment or issue of qualification for the purpose of access to education or employment, as is the application to be declared eligible to take a skills test. As you are an authority of a State these fees therefore meet the requirements of section 38-110 of the GST Act.

Where you charge an administration fee for the refund of the original fees, the administration fee relates to the underlying supply. We therefore accept that this is also GST-free. The late examination application fee is also in relation to the underlying supply. These fees are also GST-free, and will continue to be GST-free in future.

While they may also be exempt under Division 81 of the GST Act (where they are not consideration for a supply), it is not necessary to consider this as the supply is already GST-free (and so is not a taxable supply even if for consideration).

Therefore you have treated these fees correctly as being not subject to GST at all times.

Local expenses fee

A person taking an external senior examination for an examination subject may apply to you and pay a fee to take the examination at an alternative place. You charge a local expenses fee, which is not more than the reasonable cost of providing the examination at the alternative place.

From 1 July 2011 to 30 June 2012 you have advised that you consider this fee to be taxable, however you have not advised that any GST has been collected in this period.

From 1 July 2012 onwards you have treated this supply as not subject to GST, because you consider paragraph 81-15.01(1)(d) of the GST Regulations applies.

We agree that, upon the commencement of the relevant regulations on 1 July 2012, GST Regulation 81-15.01 (made under the authority given by section 81-15 of the GST Act) applies. This regulation applies such that a fee or charge for a supply of a regulatory nature made by an Australian government agency is not the provision of consideration.

The word 'regulatory' is not defined in the GST Act or the Regulations. However, the Explanatory Statement to A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No.2) 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"

Generally where only Government organisations have the legislative authority to do certain things, it will be regulatory in nature.

You are responsible for functions including accreditation, testing, assessment, moderation and certification functions under your Act. We consider that these are functions required to satisfy your regulatory purposes.

We consider that your functions mean that this fee is for, or compensation for, a supply of a regulatory nature and therefore not consideration for a supply and is not taxable when made from 1 July 2012. You have therefore treated these supplies correctly, and should continue to treat them as not subject to GST.

For any supplies that were made prior to 1 July 2012 GST is payable.

Reassessment fee

You have treated this fee as taxable from 1 July 2011 until 30 June 2012, and from 1 July 2012 to 30 June 2013. You consider that this fee should have been treated as exempt under subsection 81-10(5)(f) of the GST Act for this entire period.

Subsection 81-10(5)(f) provides that a payment is not consideration to the extent that it is an Australian fee or charge paid to an Australian government agency that relates to the agency processing information.

The reassessment fee relates to a reassessment of a person's level of achievement for a subject as stated in their results.

Even though the services performed by you may incidentally involve the processing or modifying of information, the fee relates to you reassess a person's achievement in a subject determining equivalent qualifications rather than processing, recording or modifying information. On that basis, the fee is not of a kind covered by subsection 81-10(5) of the GST Act.

The application to reassess a person's achievement in a subject/determine equivalent qualifications is also not an application for a permission, exemption, authority or licence. The fees are therefore not precluded from being consideration under section 81-10(4) of the GST Act.

Therefore, until 30 June 2012 the fee comes within the definition of consideration under subsection 9-15(1) of the GST Act. As all the elements of section 9-5 of the GST Act are satisfied, the service performed by you in reassessing is a taxable supply on which GST is payable. You have treated this fee correctly, and there are no amendments to be made.

From 1 July 2012, GST Regulation 81-15.01 (made under the authority of section 81-15 of the GST Act) applies. This regulation applies such that a fee or charge for a supply of a regulatory nature made by an Australian government agency is not the provision of consideration.

As considered above, we consider that your functions mean that this fee is for, or compensation for, a supply of a regulatory nature and therefore not consideration for a supply.

Therefore the fee is not subject to GST from 1 July 2012. We note that a small amount of GST has been collected in the period 1 July 2012 to 30 June 2013, and therefore GST has been overpaid. Please refer to question 2 for our advice regarding any potential refund of the overpaid GST amount for the period 1 July 2012 to 30 June 2013.

Script inspection fee

You have treated this fee as taxable from 1 July 2011 to 30 June 2012. You now consider that it should have been treated as exempt under subsection 81-10(5)(d) of the GST Act.

The script inspection fee allows a person who has taken an external senior examination for a subject to inspect the graded examination script. We accept that this is a fee for allowing access to information, and therefore the fee is not consideration for a supply and is not taxable.

All supplies made from 1 July 2011 are not taxable supplies. We note that a minimal amount of GST has been collected in the 2012 income year and therefore GST has been overpaid. Please refer to question 2 for advice on a potential refund for any GST overpaid in the period 1 July 2011 to 30 June 2012.

Fee for a copy of a certificate

You consider that from 1 July 2011 the fee was not taxable under section 81-10(d) of the GST Act, and you have not charged GST from this time.

This fee applies when a person requests a copy of their certificate.

We accept that, from 1 July 2011, the fee is for allowing access to information or copying information and therefore not consideration for a supply. There are no amendments to be made and you should continue to treat the fee as not being subject to GST.

Review fee, verification fee

You have treated this fee as taxable from 1 July 2011 to 30 June 2012. You now consider that it should have been treated as exempt under subsection 81-10(5)(d) of the GST Act.

The review fee applies where a person who receives their tertiary entrance statement from you requests a review of the information in the statement. The verification fee applies where a person who is issued with a certificate of achievement or statement of results applies to you for verification of information in the certificate or statement.

If this fee was merely to enable you or the person to check the accuracy of the statement for any simple or obvious clerical errors, then we would accept that it is a fee for allowing access to information under subsection 81-10(5)(d), and/or processing or modifying information (subsections 81-10(5)(c),(f)). In this scenario it would not be subject to GST, including in the period 1 July 2011 to 30 June 2012.

However, you have indicated that the review may also be of the substantive correctness of the statement based on the performance of the student then we consider that this is similar to the reassessment fee considered above. The fee is not exempt from being consideration under the GST Act. It was properly treated as taxable until 30 June 2012, and there are no amendments to be made.

From 1 July 2012 we accept that it is a regulatory fee and exempt under the GST Regulations. Therefore the fees are not subject to GST when charged from 1 July 2012. You have advised that an amount of GST in respect of these fees has been paid in this period. Please refer to question 2 for advice on a potential refund of the GST overpaid.

Service fee

You charge this fee to a person undertaking secondary education at an assessing school and who is not an Australian citizen or permanent resident.

You thought you needed to charge GST on this fee for the period 1 July 2011 to 30 June 2013. However, you have indicated that no GST was paid in the 2012 income year, but GST was paid in the 2013 income year.

You consider that from 1 July 2012 the fee should be exempt under regulation 81-15.01(f) of the GST Regulations.

As considered above, we accept that your functions mean that this fee is for, or compensation for, a supply of a regulatory nature and therefore not consideration for a supply.

Therefore the fee is not subject to GST when charged from 1 July 2012.

An amount of GST was collected after this time in relation to this fee. Please refer to our response to question 2 regarding potential refund of this amount.

Until 1 July 2012 there were no Regulations and the GST Act did not apply to make the supply exempt from GST. Any supplies made prior to 1 July 2012 were therefore taxable supplies.

Administration fee

You allow a refund of a number of different fees (for example application fees, local expenses fees and script inspection fees) in certain circumstances. Where you allow a refund, you refund the amount of the fees less an administration fee.

You have treated these fees as GST-free under section 38-110 of the GST Act at all the relevant times, and intend to continue to treat the supply as GST-free on this basis. You also consider that from 1 July 2012 paragraph 81-15.01(1)(f) of the GST Regulations would apply to exempt the fee from being consideration for any supply.

We consider that the administration fee has the same character as the underlying supply to which it is attached.

For example, the administration fee for a refund of an application fee to take an exam is GST-free as it relates to the GST-free supply. It is GST-free for all the relevant income years.

An administration fee for a local expenses fee is not subject to GST from 1 July 2012 onwards.

An administration fee for a script inspection fee is not subject to GST from 1 July 2011.

Application fee for accreditation of syllabus or guideline (or renewal of accreditation)

An application for accreditation (or renewal of an accreditation) of a syllabus or guideline must be accompanied by an application fee.

You have treated this fee as exempt under the Determination. You are entitled to treat it as GST-free under the transitional provisions in regulation 81-15.01(h)(i) until 1 July 2013, and therefore you have treated this fee correctly.

From 1 July 2013 we consider that paragraph 81-15.01(1)(f) of the GST Regulations applies to exempt the fee from being consideration for any supply.

Question 2

Summary

Based on the reasoning above, you have overpaid an amount of GST. You may claim a refund of the overpaid GST amount, but only once you have reimbursed the overpaid GST to the recipients of your supplies.

Detailed reasoning

Section 105-65 of Schedule 1 to the Taxation Administration Act 1953 (section 105-65) places a restriction on GST refunds in certain circumstances.

Under section 105-65 the Commissioner need not give you a refund where you have overpaid an amount of GST because a supply was treated as a taxable supply when the supply was not a taxable supply and one of the following applies: either the recipients have not been reimbursed an amount corresponding to the overpaid GST, or the recipient of the supply was registered or required to be registered.

You charged and paid GST on certain supplies that were not taxable supplies. The recipients of those supplies are students, and therefore would not be registered for GST. However, you have currently not reimbursed those students. Therefore the requirements of section 105-65 are met and the section applies to restrict a refund to you.

If you reimburse the recipients of each supply, then that supply will no longer be subject to the restriction of section 105-65. You may then claim a refund of the amount of GST paid on that supply. Where you undertake this course of action you should refer to the fact sheet 'Correcting GST errors' that is available on our website.

The words 'need not' in section 105-65 means that the Commissioner has discretion to allow a refund in appropriate circumstances even though the section applies. This may include where the GST has not been passed on to the recipients of a supply, or where there are other countervailing reasons for doing so (see Miscellaneous Tax Ruling MT2010/1: restrictions on GST refunds under section 105-65 of Schedule 1 to the Taxation Administration Act 1953).

We consider that you have passed on the GST to the recipients of your supplies, and do not consider that there are any reasons to enable us to exercise the discretion to enable you to claim a refund.

Therefore you must reimburse the recipients of your supplies, and retain evidence of having done so, before you can claim back the corresponding amounts of GST from us.