Edited version of your written advice

Authorisation Number: 1012894990548

Date of advice: 19 October 2015

Ruling

Subject: GST and the application of Division 81 to Government fees and charges

Question 1

Is the fee prescribed under the Regulation a taxable supply under Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999?

Answer 1

No

Relevant facts and circumstances

An Australian Government agency (the entity) is required to respond to certain emergency situations. On occasion when the entity attends an incident, it is not an actual emergency. The entity charges a fee to attend all incidents, regardless of whether there is a real emergency or not.

The Act provides:

services, fees and charges payable for

(1) Subject to subsection (2), the fees and charges prescribed by the regulations are payable to the Commissioner for the provision of services under the Acts that consist of -

(a) services provided in respect of land that, under regulations referred to in a section , is exempt or partially exempt from the levy; or

(b) services; or

(c) services provided in respect of confining or ending an incident and rendering the site of the incident safer

Regulation:

Fee prescribed in the Act

For the purposes of the section) of the Act, the fee for an attendance,

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(1)

A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(2)

A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(2)

A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(4)

A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-15

A New Tax System (Goods and Services Tax) Regulations 1999 81-15.01

Reasons for decision

All legislative references in this Ruling, unless otherwise stated are to A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The relevant legislative provisions are discussed below.

Division 81

Division 81 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.

Australian Fees and Charges

Sections 81-10 and 81-15 consider the effect of certain fees and charges and state:

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).

(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).

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 term 'Australian fee or charge' is defined in section 195-1 as:

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 Law

The term 'Australian law' is defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) and relevantly includes a State law. It includes acts and law making powers which are delegated by parliaments, such as regulations, by-laws, proclamations and orders made under Acts.

GST Regulations - a fee or charge that is not consideration for a supply

Paragraph 81-15.01(1)(d) of the GST Regulations refers to a fee or charge to compensate an Australian government agency for costs incurred by the agency in undertaking regulatory activities. The ES states:

This paragraph ensures that fees and charges which are for services provided on a cost recovery basis by government agencies, and relate to activities that are regulatory in nature, are not treated as the provision of consideration and therefore do not give rise to a taxable supply…

Paragraph 81-15.01(1)(f) of the GST Regulations refers to 'a fee or charge for a supply of a regulatory nature made by an Australian government agency.'

The term 'regulatory nature' is not defined in the GST Regulations or the GST Act. The ES 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.

In some instances, although the consumer acquires something that may be of intrinsic value to the consumer, the acquisition is made in the context of satisfying a regulatory requirement of an Australian law…

The Australian fees and charges listed in question are not consideration as they are excluded by the GST Regulations as they are regulatory.