Edited version of your written advice

Authorisation Number: 1013024836985

Date of advice: 3 June 2016

Ruling

Subject: GST - the meaning of 'a Territory' for the purposes of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Question

Does Entity A (you) come within the meaning of the term 'a Territory' for the purposes of section 38-445, section 38-450 and item 4 of the table in subsection 75-10(3) of the GST Act?

Answer

Yes, you come within the meaning of the term 'a Territory' for the purposes of section 38-445, section 38-450 and item 4 of the table in subsection 75-10(3) of the GST Act.

Relevant facts and circumstances

You were established as a body corporate under Territory legislation.

You are a government related entity for the purposes of the GST Act.

You have no shareholders.

The Territory legislation contains relevant provisions for:

• your purpose

• the Council to promote your purpose

• the duties of the Council

• the Council to act for and on behalf of you in the exercise of functions and have the control and management of your affairs, and

• the Council to make statutes that are not inconsistent with the legislation.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 38-445

A New Tax System (Goods and Services Tax) Act 1999 section 38-450

A New Tax System (Goods and Services Tax) Act 1999 Division 75

A New Tax System (Goods and Services Tax) Act 1999 subsection 75-10(3)

Reasons for decision

All legislative references are to the GST Act unless otherwise stated.

The issue to be examined is whether the entity comes within the meaning of the term 'a Territory' for the purposes of section 38-445, section 38-450 and Item 4 of the table in subsection 75-10(3) of the GST Act, in relation to the requirement that the supplier is 'the Commonwealth, a State or a Territory'.

Goods and Services Tax Ruling GSTR 2006/5 (GSTR 2006/5) provides relevant guidance about the meaning of 'Commonwealth, a State or a Territory'.

Paragraph 11 of GSTR 2006/5 discusses the fundamental principle established by the High Court of Australia in cases concerning the meaning of 'a State' in section 114 of the Australian Constitution is that, if the corporation is discharging governmental functions as an instrument of the State, that is, the State is carrying on the relevant business or other function through the corporation, then the corporation is the State.

However, if the intention is for the corporation to perform its functions independently of, and not as an instrument of, the State so that the concept of the State activity cannot be realistically applied to that which the corporation does, then the corporation is not the State.

Paragraph 10 of GSTR 2006/5 states that for the ease of reference the discussions in the ruling refer to the State, as that is the context in which the issue most commonly arises for GST purposes, but the principles apply equally in determining whether a corporation is the Commonwealth or a Territory. Therefore, in our discussion below of the Commissioner's view as it applies to your circumstances, we have used the word 'Territory' instead of the word 'State'.

Paragraph 12 of GSTR 2006/5 discusses principles to be considered in determining if a corporation is to be characterised as being the Territory. The matters covered by the principles include:

• whether a corporation is the Territory requires consideration of every feature relevant to its relationship with the Territory

• ownership and management of the corporation and the purposes it is required to pursue

• provision that the corporation must pursue the interests of the Territory or the public

• a provision that positively permits the corporation to take account of other external interests is a contrary indicator

• the absence of corporators (shareholders)

• financial arrangements, and

• regulatory role.

Therefore, it is necessary to consider the principles in your circumstances.

Purpose the corporation is required to pursue

The Territory legislation provides your purpose and that the Council is to promote your purpose. The legislation specifies the duties of the Council, including that members of the Council must act in your best interests, carry out duties for a proper purpose and not cause detriment to you.

Therefore, we consider that you have the purpose imposed on you by the legislation and are required to act in accordance promoting the purpose and objects.

Ownership

You have no shareholders (subparagraph 12(i) of GSTR 2006/5) and there is no provision under the Territory legislation to take account of external interests (subparagraph 12(e) of GSTR 2006/5). This is an indicator that you are the Territory.

Management

The Territory legislation provides that the Council acts for and on behalf of you in the exercise of functions and has the control and management of your affairs. As highlighted above, under the purpose you are required to pursue, the Council is to act in a manner as best calculated to promote your purpose. Therefore, while the Council manages you, it does so within the bounds placed upon it by legislation.

There is no provision that gives a general power to the Minister or Executive Council to override decisions of the Council. However, there are specific areas where the Council is required to obtain the approval of the Minister.

In addition to the Territory legislation, you are subject to other legislation.

Financial arrangements

You are subject to certain legislative requirements in relation to your financial arrangements under other Acts.

Regulatory function

The Territory legislation allows the Council to make statutes that are not inconsistent with the legislation.

Conclusion

It is considered that an examination of the principles set out in paragraph 12 of GSTR 2006/5, identifying the features relevant to your relationship with the Territory, indicates that you are to be characterised as being the Territory.

Accordingly, consistent with the guidance provided in GSTR 2006/5, it is considered that you come within the meaning of the term 'a Territory' for the purposes of section 38-445, section 38-450 and item 4 of the table in subsection 75-10(3) of the GST Act.