Edited version of your private ruling

Authorisation Number: 1012470048194

Ruling

Subject: Division 81 and the GST treatment of particular taxes, fees or charges

Question 1

Are payments of the taxes, fees or charges listed below excluded from goods and services tax (GST) under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when they are imposed on or after 1 July 2013?

· Environment Benefit Payment

· Fees associated with crown lands legislation

· Licence fees to carry out a tour

· Fees associated with agreements relating to reserves

· Permit fees for activities that require authorisation

· Royalties in relation to taking a protected animals etc

Answer

Yes.

All of the fees and charges described are exempt from being consideration for any supply, by virtue of the operation of Division 81 of the GST Act.

Relevant facts and circumstances

· You are authorised to seek a ruling on behalf of the relevant government entities in relation to taxes, fees and charges they impose.

· The relevant entities are all registered for GST.

· The fees or charges considered in this ruling are currently listed as exempt under the A New Tax System (Goods and Services Tax)(Exempt Taxes, Fees and Charges) Determination 2011 (No 1) (the Determination).

· The fees or charges are described in further detail below:

Environment Benefit Payment (compensation payment)

· State legislation aims to conserve, protect and enhance the native vegetation of the State.

· Clearance of vegetation may only be cleared in accordance with consent given by the appropriate Council under the State legislation.

· The application for consent must be accompanied by a vegetation management plan and information that establishes that under the plan there will be an environmental benefit. Otherwise it may propose that a payment is made into a fund to compensate for the fact that there will not be an environmental benefit associated with the proposed clearance.

· The application for consent must be accompanied by a prescribed (application) fee which includes the fee prescribed for the report relating to the proposed clearance. This fee is prescribed under Regulations.

· Where there is not an environment benefit of the proposed clearing the alternative compensation payment is imposed under State legislation.

· In those circumstances the applicant must pay an amount sufficient to achieve an environmental benefit by establishing or regenerating vegetation on similar alternative land and preserving or maintaining that vegetation once established or reinstated.

· Consent to the clearance may also be subject to any other conditions the Council wishes to impose.

· The payment is made into a specified fund. The fund is managed and controlled by the Council. The Council is comprised of members selected by the Minister following the requirements in the legislation.

· The Auditor-General may at any time, and must at least once in each year, audit the accounts of the fund.

· The secretary and other members of staff of the Council are Public Service employees.

· The Council may make use of the services or staff of a government administrative unit, and you have advised that a government Department provides financial and administrative support to the Council (in the administration of the Fund).

· The Department is an administrative unit established under relevant State legislation.

Fees associated with Crown lands legislation

· The Department has responsibility for the administration of Crown land transactions and managing Crown land in the interests of the State.

· Under State legislation the Registrar-General must maintain appropriate registers referred to as a Crown land register. Activities include the issue, alteration, correction or cancellation of certificates or other documents of title and the making, recording, alteration, correction or cancellation of entries or endorsements in the Crown land register.

· Certain fees are payable in relation to Crown lands and are imposed under State regulations.

· The regulations prescribe application fees for activities relating to dedications, disposals, easements, leases and licences. There are also application fees for Ministerial reviews, as well as miscellaneous fees such as:

· fee for preparing a request by the Minister to alter or cancel a grant of fee simple in land or certificate of title on behalf of another party

· application fee for a duplicate or amended consent granted under any provision of the Act

· fee for correcting an error in the name or other particulars supplied by or on behalf of a lessee, purchaser or other party in the Crown land register

· fee for processing a transaction (other than a transaction for which an application fee has been paid) under the Act at the request of any person for the benefit of that person or some other person nominated by that person.

· fee for preparing or checking definitions for notices under the Act.

· Document preparation fees are also payable in addition to the fee for processing a transaction. This is charged on a cost recovery basis based on staff time taken to prepare the documents. Document preparation fees are paid for dedications of land, granting of land and easements, leases (including assignments, transfers, surrenders, resumptions, discharges etc).

Licence fees to carry out a tour

· The Department is also responsible under relevant legislation that enables it to grant a licence to a person to use a reserve for a specified purpose or purposes. The licence cannot be transferred etc without the consent of the authority that granted the licence.

· The legislation states that the licence is subject to such terms and conditions, including fees, as the relevant authority sees fit.

· Regulations provide the activities that must be authorised by a lease, licence or agreement. It includes conducting tours for a fee or reward.

· A person must not, without a licence take a group of people into a wilderness protection area or wilderness protection zone on a sight seeing or scientific expedition.

· The amount of fees is specified by the Minister/authority in the terms and conditions of the licence.

Other fees associated with agreements relating to reserves

· As discussed above, relevant legislation allows the Minister to grant a licence to, or enter into an agreement, regarding use of a reserve. Regulations provide the activities that must be authorised by a lease, licence or agreement.

· You have advised that agreements are entered into for events within the boundaries of the reserve or National Park. For example, a surfing competition must enter into an agreement with the Minister to set up etc.

· Agreements are also entered into where a person undertakes filming in the reserve that is for commercial purposes.

· Legislation states that the agreement is subject to such terms and conditions, including fees, as the relevant authority sees fit.

· You have advised that the agreement fee charged is a notional amount towards the Department's administration costs (eg receiving the request, considering it against the law/regulations/standards, liaising with the applicant regarding the request/preparing the agreement for Ministerial sign-off etc). That is, the fee is aimed at cost recovery, but is often less than the administration costs involved.

· The fees are separate to the National Park entry fees. For example, an agreement for an event may require that those entering the park pay the entrance fee directly to the Department, or it may require that the entity collect the fees on behalf of the entrants and forward to the Department. You have advised that your ruling request is limited to the agreement fee and you do not require a ruling on the park entrance fee.

Permit fees for activities that require authorisation

· A further requirement under the relevant legislation is that a person must not undertake or continue an act or activity in relation to a protected animal.

· Regulations have been made that prohibits certain activities. These include:

· being within a certain distance or doing certain activities within the vicinity of a protected animal

· Feeding, touching or making noise near a protected animal

· Restrictions have also been placed on some commercial activities for fee or reward, for example transporting people for a fee or reward to a prescribed area to view animals.

· However, the legislation allows the Minister to grant a permit to a person to undertake an act or activity that would otherwise contravene the Act and/or the Regulations.

· The permit fee is imposed under the Regulations and is specified. You have advised that the permit fees are paid to the Department.

· You have advised that the permit fee specified in the legislation has been determined based on the estimated cost of the Department's administrative time in relation to the permits (eg entering data, issuing and posting permits, administering the terms and conditions, answering questions about permissions etc).

Royalties in relation to taking a protected animal etc

· Under relevant legislation a person must not take a protected animal or the eggs of a protected animal.

· However, under the Act the Minister may grant to any person a permit to take protected animals or the eggs of protected animals, if satisfied that it is desirable to grant the permit. Reasons for granting a permit include for scientific researching, tagging or similar, removal of animals that are causing damage or for any purpose (other than sale) considered proper and consistent with the objectives of the Act.

· Under the Act the keeping and sale of protected animals (or more than one animal of a prescribed species) is also prohibited unless authorised by a permit granted by the Minister.

· The Minister may grant a permit for farming protected animals. Fees and royalties may be charged in accordance with the Act. Similarly, the Minister may grant a permit for harvesting protected animals, and charge fees and royalties in accordance with the Act. The fees fixed by regulation in respect of permits granted may exceed the Minister's costs in granting the permits and administering this Division in relation to the permits.

· The Act further states that the Governor may, by regulation, declare that a royalty is payable to a fund where a person takes an animal, carcass, skin, egg or plant specified in the regulation.

· Regulations have been made that set out the fees for permits, and also that specifies the royalties payable.

· The level of royalty depends on the conservation status of the species. You have advised that the charges do not directly reflect the commercial value of the animals, rather they relate to the administrative costs of overseeing their appropriate capture and care.

· You have advised that money in the fund may be used to cover the costs of administering the Act, for the benefit of the industry of farming the species, and for research into the species.

· The fund is controlled by the government, administered by the Department.

Relevant legislative provisions

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

Section 9-5

Division 81

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

Division 81

Reasons for decision

Summary

For the reasons discussed below, payment of the taxes, fees or charges in question is not the provision of consideration for a supply. Therefore taxable supplies are not made, and the transactions are not subject to GST.

Detailed reasoning

Background

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, the 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). As a transitional measure, fees and charges listed in the Treasurer's determination as at 30 June 2011 remain exempt until 1 July 2013. All the fees considered in this ruling are covered by the Determination and therefore remain exempt until that time.

We have also advised that PSLA 3618 enables you to self-assess these fees, and where you consider that they are exempt this treatment will not be disturbed retrospectively if found to be incorrect. However, you have advised that you require our ruling on the fees and charges described.

Division 81 of the GST Act was amended as of 1 July 2011. The amended legislation continues the intention that regulatory charges that do not relate to particular goods or services will be exempt from GST. In this context, Division 81 of the GST Act allows 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.

In particular section 81-5 of the GST Act provides that the payment of an Australian tax is not consideration, and section 81-10 of the GST Act considers that the payment of certain Australian fees and charges are not consideration. Regulations pursuant to Division 81 have also been made 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 tax, fee or charge

As a starting point, it is necessary to determine whether the taxes, 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 tax is a tax (however described) imposed under an Australian law. 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)).

Australian government agency has the meaning given by section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This in turn 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.

There also needs to be a clear authority to impose a particular tax, fee or charge before it can be considered to be imposed under a state law.

Each of the taxes, fees or charges imposed are considered below to determine whether their payment is the provision of consideration in light of Division 81.

Environment Benefit Payment (compensation payment)

The compensation payment is made into the Fund. The Fund is managed and controlled by a Council comprised of a number of members. These members are selected by the Minister. The members of Council are public service employees, and the Council may also makes use of the services of the Department for financial and administrative support with the Fund. The Fund must be audited at least once a year. We consider that the fee or charge is therefore paid to an Australian government agency.

Where there is not an environment benefit to the proposed clearing the compensation payment is imposed under the relevant Act.

As the fee or charge is paid to an Australian government agency, and is imposed under an Australian law (which includes a law of a State), it is an Australian fee or charge.

Having established that the compensation payment is an Australian fee or charge, it is necessary to consider whether it is a fee or charge that does not constitute consideration under Division 81 of the GST Act and is therefore not subject to GST.

We consider that the compensation payment relates to the person's permission to clear land, and is a necessary condition of approval being granted. We accept that in these circumstances the payment relates to the provision of a permission under section 81-10(4) of the GST Act and is therefore not the provision of consideration (see section 81-10(1) of the GST Act). The payment is not non-regulatory or otherwise prescribed as being consideration under the GST Regulations.

Therefore, even if a supply were made in exchange for this payment, it is not a taxable supply as it is not for consideration.

Fees associated with Crown lands legislation

The fees payable in relation to Crown lands are imposed under the Regulations. They are therefore imposed under an Australian law.

They are payable to the Department. The Department is an administrative unit established under relevant legislation and is an Australian government agency.

Therefore the fees in question are Australian fees or charges.

There are two types of fees, the base application fees for processing transactions and in addition to these there are also documentation preparation fees payable.

We consider that the application fees can be considered to be a fee or charge relating to information or record keeping. They are paid to you with a request that you process or modify information contained in your registers. Therefore these fees are not consideration for a supply by virtue of section 81-10(5) of the GST Act.

The document preparation fees are charged on a cost recovery basis. However, they are prepared for the purposes of enabling transactions to be processed. Therefore the documents and fees relate to you recording information, processing information etc. Therefore these fees are also not consideration for a supply by virtue of section 81-10(5) of the GST Act.

For the avoidance of doubt, we also consider that the GST Regulations apply such that the documents preparation fees are not consideration. They are not a type of fees or charge that constitutes consideration under regulation 81-10.01 of the GST Regulations, in particular because they are regulatory (and therefore not non-regulatory). The document preparation fees can be viewed as a fee or charge to compensate an Australian government agency for costs incurred by the agency in undertaking regulatory activities (see Regulation 81-10(1)(f)), and therefore they do not constitute consideration.

Therefore these fees are not consideration for any supply, and no taxable supply is made.

Licence fees to carry out a tour

Licence fees to carry out a tour are payable to the Department, an Australian government agency. They are imposed under an Australian law and are therefore Australian fees or charges.

We consider that the fee or charge that is paid relates to (or relates to an application for) a permission, authority or licence. It is therefore not consideration under sections 81-10(4) and 81-10(1) of the GST Act. However, this is subject to Regulations made under section 81-10(2) that prescribes that certain fees and charges are to be treated as consideration.

While paragraph 81-10.01(c) of the GST Regulations prescribes that a fee for use of or entry to a facility (except for an entry fee to a national park) is the provision of consideration, we do not consider that a licence to enable a person to carry out a tour is properly characterised as a fee for use of or entry to a facility. Therefore the fee or charge is not consideration under this provision of the Regulations. We also consider that the nature of the fee is that it is regulatory (rather than non-regulatory), and therefore it is not consideration under paragraph 81-10.01(g) of the GST Regulations.

As the fee is not consideration for a supply, no taxable supply is made when a fee is taken for a licence granted to a person to carry out a tour.

Other fees associated with agreements relating to reserves

Another circumstance in which a licence may be given, or an agreement entered into, is regarding the use of a reserve. The Regulations specify the activities that must be authorised by a lease, licence or agreement. In particular, you have sought our view on agreements are entered into for events within the boundaries of the reserve or National Park, or for undertaking filming in the park or reserve that is for commercial purposes.

The agreement fee is paid to the Department (an Australian government agency) and the ability to charge fees is given by the relevant Act. Therefore we consider that the fees charged are Australian fees or charges.

The fee is a notional amount towards the Department's administration costs. The fees are separate to National Park entry fees.

We consider that the fee relates to the provision under an Australian law of a permission or authority (see section 81-10(4) of the GST Act). It is therefore not the provision of consideration (see section 81-10(1) GST Act). We do not consider that it is properly characterised as a fee for hire, use of or entry to a facility, and therefore is not consideration under paragraph 81-10.01(c) of the GST Regulations. We also consider that the nature of the fee is that it is regulatory (rather than non-regulatory), and therefore it is not consideration under paragraph 81-10.01(g) of the GST Regulations.

As the fee is not consideration for a supply, no taxable supply is made when a fee is taken for a licence granted or an agreement entered into regarding the use of a reserve.

Permit fees for activities that require authorisation

Under the Act a person must not undertake, or continue, an act or activity in relation to a protected animal. However, the Act allows the Minister to grant a permit to a person to undertake an act or activity that would otherwise contravene the Act or the Regulations.

The permit fee is imposed under Regulations, and the permit fees are paid to the Department. Therefore we consider that it is an Australian fee or charge.

The fee is determined based on the Department's administrative time in relation to the permits.

We consider that the fee relates to the provision under an Australian law of a permission or authority (see section 81-10(4) of the GST Act). It is therefore not the provision of consideration (see section 81-10(1) GST Act). We consider that the nature of the fee is that it is regulatory (rather than non-regulatory), and therefore it is not consideration under paragraph 81-10.01(g) of the GST Regulations.

As the fee is not consideration for a supply, no taxable supply is made when a fee is taken for a permit to undertake an act or activity that would otherwise contravene the Act or the Regulations.

Royalties in relation to taking a protected animal etc

As described in the ruling facts, under the Act a person must not take a protected animal or the eggs of a protected animal. However, the Minister may grant a permit in certain circumstances to do these things. The Act further specifies that the Governor may declare by regulation that a royalty is payable to a Fund where an animal, carcass, skin, egg or plant specified in the regulation is taken pursuant to a permit.

The fees for permits and for royalties are specified in Regulations and are therefore imposed under an Australian law. The money is payable to a fund administered by the Department, and therefore the fees are payable to an Australian government agency. As such the permit and royalty fees are Australian fees or charges.

The permit fees are fees for a permission under subsection 81-10(4) of the GST Act. We consider that the payment of the royalty also relates to the provision or retention of the permission or authority to remove protected animals or items. It is a necessary condition of holding the permission. Both fees are regulatory (rather than non-regulatory), and are therefore not prescribed as being consideration under the GST Regulations (see paragraph 81-10.01(g)).

Therefore we consider that both the permit fees and the royalties are not consideration for any supply.

Conclusion

For the reasons provided, all of the fees or charges described are excluded from being subject to GST by Division 81 of the GST Act.