• Legal database
Legal database
Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of private advice

Authorisation Number: 1012649110416

Ruling

Subject: GST and the emptying of septic tanks

Question 1

Is a supply of emptying septic tanks a taxable supply to you, for the purposes of determining your input tax credit entitlement under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999?

Answer

No, the supply of emptying septic tanks is a GST-free supply under section 38-295 of the GST Act. You are not entitled to claim an input tax credit in relation to this acquisition.

Relevant facts and circumstances

An Australian entity (you) operate a business in Australia. You are registered for goods and services tax (GST).

Your business has septic tanks. You require these tanks to be emptied on a regular basis and the waste disposed of.

You engage a supplier to empty your septic tanks and remove the waste, and they are also registered for GST purposes in Australia. The supplier has included GST in their invoices issued to you for this supply.

You are of the opinion that this supply should be a GST-free supply to you.

You declined to request that the supplier also be a party to this ruling, thus this advice is provided to you only as the recipient of the supply.

Relevant legislative provisions

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

Section 11-5 of A New Tax System (Goods and Services Tax) Act 1999

Section 38-295 of A New Tax System (Goods and Services Tax) Act 1999

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

Reasons for decision

You are entitled to claim an input tax credit (ITC) on any creditable acquisition you make. One of the requirements for a creditable acquisition is that the supply of the thing to you is a taxable supply.

Taxable supply:

GST is payable on a taxable supply.

Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) you make a taxable supply if:

    (a) you make the supply for *consideration;

    (b) the supply is made in the course or furtherance of an *enterprise
    that you *carry on;

    (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.

      (*Denotes a term defined in section 195-1 of the GST Act)

From the facts provided, the supply of the service of emptying septic tanks would satisfy the requirements of a taxable supply under paragraphs 9-5(a) to 9-5(d) of the GST Act as follows:

    (a) the supplier provides the services in return for consideration by way of payments;

    (b) the supply is made in the course of an enterprise (business) that the supplier carries on;

    (c) the supply is connected with Australia as the supplier made the supply through an enterprise (business) carried on in Australia; and

    (d) the supplier is registered for GST.

A supply of the service of emptying septic tanks is not input taxed under any provisions of the GST Act or any other legislation. The next step is to determine whether the supply is GST-free.

GST-free supply

Section 38-295 of the GST Act provides that a supply of a service that consists of emptying a septic tank is GST-free.

Paragraphs 55 and 56 of Goods and Services Tax Ruling GSTR 2000/25 state:

      55. Section 38-295 provides that the emptying of a septic tank is GST-free. This is regardless of whether it is on residential premises.

      56. The Macquarie dictionary defines a 'septic tank' as: a tank in which solid organic sewage is decomposed and purified by anaerobic bacteria'.

Therefore the supply of a service consisting of the emptying of a septic tank situated on both commercial and residential premises is GST-free under section 38-295 of the GST Act.

Claiming Input tax credits

Section 11-5 of the GST Act states:

You make a creditable acquisition if:

          (a) you acquire anything solely or partly for a *creditable purpose; and

        (b) the supply of the thing to you is a *taxable supply; and

        (c) you provide, or are liable, to provide, *consideration for the supply; and

        (d) you are *registered, or *required to be registered.

(*Denotes a term defined in section 195-1 of the GST Act)

You must satisfy all the requirements of section 11-5 of the GST Act to make a creditable acquisition and be entitled to claim an ITC.

You acquire the service of emptying a septic tank for a creditable purpose for use in your business and you provide consideration for this acquisition. You are registered for GST. In addition, the supply to you must be a taxable supply.

You will be making a creditable acquisition and are entitled to claim an input tax credit if the supply to you is a taxable supply.

You will not satisfy all the requirements of a creditable acquisition and are not entitled to claim an input tax credit where a supply to you is GST-free.

All publications mentioned in this ruling are available on our website at www.ato.gov.au


Back to top