Edited version of your written advice

Authorisation Number: 1012788777699

Ruling

Subject: GST and the provision of a range of services

Question 1

Is the fee received by you subject to GST?

Answer

No, the fee received by you is not subject to GST because the fee is not the provision of consideration under subsection 9-17(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Question 2

Are you making a taxable supply when you on-supply resources under a Subdivision 153-B arrangement?

Answer

Based on the information provided, you will only make a taxable supply when you on-supply resources under a Subdivision 153-B arrangement where the initial supply of the resources are a creditable acquisition.

Where the initial supply from the third party supplier is not a creditable acquisition, then the on-supply will not be a taxable supply. This is because, irrespective of the existence of a Subdivision 153-B arrangement, the nature of the acquisition stays the same. That is, if the initial supply by the third party supplier is a non-taxable supply then the on-supply will also be non-taxable.

In addition, where a valid Subdivision 153-B arrangement is in place, subsection 9-17(3) of the GST Act will have no application unless the initial supply is from a government related entity.

Question 3

Are you making a taxable supply when you supply services under a Subdivision 153-B arrangement?

Answer

No, you are not making a taxable supply when you supply services because the payments received by you for the services are not the provision of consideration under subsection 9-17(3) of the GST Act.

It should be noted that in this situation, the Subdivision 153-B arrangement has no application as there are only two parties to the supply of the services. That is, there is no initial supply of services that is being on-supplied in the same form. Rather, there is just a supply of services.

Question 4

Are you making a taxable supply when you on-supply other services under a Subdivision 153-B arrangement?

Answer

Based on the information provided, you will only make a taxable supply when you on-supply other services under a Subdivision 153-B arrangement where the initial supply of services from the third party supplier is a creditable acquisition.

Where the initial supply from the third party supplier is not a creditable acquisition, then the on-supply will not be a taxable supply. This is because, irrespective of the existence of a Subdivision 153-B arrangement, the nature of the acquisition stays the same. That is, if the initial supply by the third party supplier is a non-taxable supply then the on-supply will also be non-taxable.

In addition, where a valid Subdivision 153-B arrangement is in place, subsection 9-17(3) of the GST Act will have no application unless the initial supply is from a government related entity.

Question 5

Are you making a taxable supply when you on-supply management services under a Subdivision 153-B arrangement?

Answer

Based on the information provided, you will only make a taxable supply when you on-supply management services under a Subdivision 153-B arrangement where the initial supply of the management services from the third party supplier is a creditable acquisition.

Where the initial supply from the third party supplier is not a creditable acquisition, then the on-supply will not be a taxable supply. This is because, irrespective of the existence of a Subdivision 153-B arrangement, the nature of the acquisition stays the same. That is, if the initial supply by the third party supplier is a non-taxable supply then the on-supply will also be non-taxable.

In addition, where a valid Subdivision 153-B arrangement is in place, subsection 9-17(3) of the GST Act will have no application unless the initial supply is from a government related entity.

Question 6

Are you making a taxable supply when you supply accommodation under a Subdivision 153-B arrangement?

Answer

No, you are not making a taxable supply when you supply accommodation because the payments are not the provision of consideration under subsection 9-17(3) of the GST Act.

In this situation, the Subdivision 153-B arrangement has no application because there are only two parties to the supply.

Question 7

Are you making a taxable supply when you supply other accommodation under a Subdivision 153-B arrangement?

Answer

Yes, you are making a taxable supply when you supply other accommodation. This is because even though the Subdivision 153-B arrangement has no application as there are only two parties to the supply, the payments do not satisfy the non-commercial test in paragraph 9-17(3)(c) of the GST Act. As such, the payments are not excluded from being consideration.

Relevant facts and circumstances

You are a government related entity.

You and the other parties are separately registered for GST and are all government related entities as they satisfy the definition of 'government related entity' under section 195-1 of the GST Act.

Under written agreements you acquire various goods and services from third party suppliers for on-supply to the other parties. You only recover the actual costs incurred by you from the other parties.

You also supply services and accommodation in your own right. While these services are supplied at cost, some accommodation supplied is not based on your actual or anticipated costs of making the supply.

You and the other parties are allocated funds by the Government via appropriation to pay for the various goods, services and accommodation.

For GST purposes, you have entered into an agreement with the other parties in accordance with Subdivision 153-B of the A New Tax System (Goods and Services Tax) Act 1999.

Relevant legislative provisions

A New Tax System (Australian Business Number) Act 1999

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

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

A New Tax System (Goods and Services Tax) Act 1999 subsection 9-17(3)

A New Tax System (Goods and Services Tax) Act 1999 section 153-50

A New Tax System (Goods and Services Tax) Act 1999 section 153-55

A New Tax System (Goods and Services Tax) Act 1999 section 153-60

A New Tax System (Goods and Services Tax) Act 1999 section 184-1

A New Tax System (Goods and Services Tax) Act 1999 section 149-5

Reasons for decision

Question 1

On the facts provided, the fee received by you satisfies the requirements of subsection 9-17(3) of the GST Act.

It follows that no GST was and is payable by you in relation to the fee paid for those supplies.

Question 2

A Subdivision 153-B arrangement is a mechanism for principals and intermediaries who have entered into a written agreement to be treated as separate suppliers or acquirers for GST purposes.

Goods and Services Tax Ruling GSTR 2000/37 which deals with agency relationships explains at paragraph 32 that the relationship between the parties is determined by an examination of the particular facts surrounding relevant transactions and that if there is any doubt about the position of the parties in a transaction, an agreement may contain descriptions that clarify the relationship.

In addition, paragraph 45 of GSTR 2000/37 provides that when an agent is authorised to undertake a transaction on behalf of the principal, thereby binding the principal to the legal effects of the transaction, then the transaction is made by the principal through the agent.

Where an agency arrangement exists, the general agency rules in Subdivision 153-A of the GST Act will apply to the transactions made through an agent unless the parties have entered into a Subdivision 153-B arrangement. Where this occurs, the special agency rules under Subdivision 153-B of the GST Act will apply.

As outlined in paragraph 24 of GSTR 2000/37, the general effect of entering into a Subdivision 153-B arrangement is that the principal and its intermediary in respect of both supplies and acquisitions are treated as acting between a principal and another principal.

In this case, you have entered into a valid Subdivision 153-B agreement.

Therefore, you will be treated as making the acquisitions from the third party suppliers and the other parties will be treated as making corresponding acquisitions from you (paragraph 153-50(1)(c) of the GST Act).

In addition to making acquisitions, subsection 153-60(2) of the GST Act provides that the intermediary will also be taken to have made a taxable supply to the principal of the same thing that the intermediary acquired from the third party supplier where that initial supply is a creditable acquisition.

One of the requirements for a creditable acquisition under section 11-5 of the GST Act is that the supply of the thing to you is a taxable supply. The third party suppliers will be making a taxable supply where all of the requirements in section 9-5 of the GST Act are satisfied.

As explained in paragraph 87 of GSTR 2000/37:

87. The intermediary is taken to make a taxable supply to the principal of the same thing that the intermediary is taken to acquire. The value of that supply is determined by reference to the amount that the principal is required to pay the intermediary.

Following on from this, paragraph 88 of GSTR 2000/37 further adds that as the 'supply by the intermediary to the principal is a taxable supply under the arrangement, the intermediary is required to account for the amount of GST payable on the supply …'

Therefore, in the circumstances where your initial acquisition of the resources is a creditable acquisition, you will be making a taxable supply when you on-supply these resources under a Subdivision 153-B arrangement.

However, a supply that is not a taxable supply on which GST is payable will not be a creditable acquisition in the hands of the recipient.

As explained in paragraph 74 of GSTR 2000/37 there is nothing in section 153-50 of the GST Act that:

…prohibits supplies that are not taxable supplies and acquisitions that are not creditable acquisitions from being included in such an arrangement. This includes supplies and acquisitions that are GST-free, input taxed, or certain payments of an Australian tax or Australian fee or charge. Also, the nature of these supplies and acquisitions, as between the principal and the third party, is not changed by entering into a Subdivision 153-B arrangement. For example, an acquisition by a principal from a third party that is not a creditable acquisition will not be deemed to be a creditable acquisition because of the arrangement.

This means that whether a Subdivision 153-B arrangement is in place or not, the nature of the acquisitions, whether they are creditable acquisitions, GST-free, input taxed or non-creditable acquisitions, stays the same.

In other words, while the parties may enter into a Subdivision 153-B arrangement that includes GST-free, input taxed supplies and non-taxable supplies, such an arrangement will not have any practical effect.

This means that, you will not be making a taxable supply where the acquired resources are not creditable acquisitions under the arrangement.

Question 3

From the facts provided, the payments received by you for the services satisfy the requirements of subsection 9-17(3) of the GST Act.

That being the case, the payments made to you in connection with the supplies of services are not the provision of consideration.

Consequently, the supplies of services you made are not taxable supplies under section 9-5 of the GST Act and thus, not subject to GST.

Question 4

The reasoning given in Question 2 also applies to this question.

Question 5

The reasoning given in Question 2 also applies to this question.

Question 6

As outlined previously, the existence of a Subdivision 153-B arrangement does not alter the nature of the supply.

From the facts provided, the payments received by you for the provision of accommodation satisfy all of the requirements of subsection 9-17(3) of the GST Act.

That being the case, the payments made to you in connection with the supplies of accommodation are not the provision of consideration.

Consequently, the supplies you made are not taxable supplies under section 9-5 of the GST Act and thus, not subject to GST.

Question 7

From the facts provided, the payments received for other accommodation do not satisfy the non-commercial test under subsection 9-17(3) of the GST Act because the payments are not based on your actual or anticipated costs of making the supply.

That being the case, the payments made to you in connection with the supplies of other accommodation are consideration for GST purposes.

Consequently, the supplies are taxable supplies under section 9-5 of the GST Act and thus, subject to GST.