Edited version of your written advice

Authorisation Number: 1013040515103

Date of advice: 23 June 2016

Ruling

Subject: Application of GST to a fee

Question

Should goods and services tax (GST) be applied to the Fee that you charge?

Answer

No, GST does not apply. The Fee is not consideration for a taxable supply. It is an Australian fee or charge of a kind prescribed by the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) and under section 81-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) it is not the provision of consideration.

Relevant facts and circumstances

1. You charge a Fee.

2. You have provided relevant information about your entity's operations.

3. You have provided relevant legislation and regulations governing the Fee.

Relevant legislative provisions

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

Section 81-15

Section 195-1

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

Regulation 81-15.01

Income Tax Assessment Act 1997 (ITAA 1997)

Section 995-1

Reasons for decision

Section 81-15 of the GST Act states that the GST 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.

Australian fee or charge is defined in section 195-1 of the GST Act to mean a fee or charge (however described), other than an Australian tax, imposed under and Australian law and payable to an Australian government agency. Therefore, for the Fee to not be consideration for a supply it must be:

1. imposed under an Australian Law

2. payable to an Australian government agency

3. of a kind prescribed by the GST Regulations.

1. Is the Fee imposed under an Australian law?

Australian law is defined in section 195-1 of the GST Act to have the meaning given by section 995-1 of the ITAA 1997. Section 995-1 of the ITAA 1997 provides an Australian law means a Commonwealth law, a State law or a Territory law.

The Fee is imposed under an Australian law.

2. Is the Fee payable to an 'Australian government agency'?

Australian government agency is defined in section 195-1 of the GST Act to have the meaning given by section 995-1 of the ITAA 1997. Australian government agency means:

(a) the Commonwealth, a State or a Territory, or

(b) an authority of the Commonwealth, a State or a Territory.

The term 'an authority of the Commonwealth, a State or a Territory' is not defined in either the GST Act or the ITAA 1997. A number of decided cases have considered the meaning of 'authority of a State' and 'authority'.

In Committee of Direction of Fruit Marketing v. Australian Postal Commission (1980) 144 CLR 577 (the Fruit Marketing case) the High Court unanimously decided that the Committee of Direction of Fruit Marketing was an authority of the State of Queensland for the purposes of the Postal Services Act 1975 . Gibbs J stated at 580:

   The expression "authority of a State" refers to a body which exercises power derived from or delegated by the State, but the fact that a body is established under State law and possesses power conferred upon it by State law will not necessarily mean that the body is an authority of a State...The words "authority of a State" naturally mean a body which is given by the State the power to direct or control the affairs of others on behalf of the State - ie, for the purposes of and in the interests of the community or some section of it. In some cases it may be decisive that the body concerned is given exceptional powers of a kind not ordinarily possessed by an individual or a company, and that those powers are intended to be exercised for a purpose that would ordinarily be regarded as a purpose of government. On the other hand, in some cases it may be decisive that the body is conducted in the interest, and for the profit, of its members. In all cases, however, it is necessary to have regard to all the relevant circumstances in order to determine the character of the body in question.

In FC of T v. Bank of Western Australia Ltd ; FC of T v. State Bank of New South Wales Ltd 96 ATC 4009; (1995) 133 ALR 599 the meaning of the word 'authority' was considered was considered by the Full Federal Court in the context of the phrase 'the official use,... and not for sale by,... an authority which is completely controlled by,... a State' in the Sales Tax (Exemptions and Classifications) Acts 1935 and 1992. In that case Hill J looked at a number of Australian cases as to the meaning of the word 'authority'. He derived the following propositions from those cases:

• A question whether a particular entity is an authority will be a question of fact and degree dependent upon all the circumstances of the case: The Western Australian Turf Club v. FC of T 78 ATC 4133; (1978) 139 CLR 288 (Western Australian Turf Club) per Stephen J with whom Barwick CJ agreed at ATC 4134; CLR 290. No one factor will be determinative, rather there will be a 'range of considerations': the Fruit Marketing case at 580.

• A private body, corporate or unincorporated, established for profit will not be an authority: Renmark Hotel Inc v. FC of T (1949) 8 ATD 424; (1949) 79 CLR 10 (Renmark Hotel) per Rich J at ATD 429; CLR 17, FC of T v. Silverton Tramways Co Ltd (1953) 10 ATD 295; (1953) 88 CLR 559 ( Silverton Tramways ) per Dixon CJ at ATD 297; CLR 566.

• Incorporation by legislation is not necessary before a body may be classified as an authority: Renmark Hotel per Rich J at ATD 430; CLR 19, Western Australian Turf Club at ATC 4135; CLR 293.

• For a body to be an authority of a State or of the Commonwealth, the body in question must be an agency or instrument of government set up to exercise control or execute a function in the public interest. It must be an instrument of government existing to achieve a government purpose: the Fruit Marketing case.

• The body in question must perform a traditional or inalienable function of government and have governmental authority for so doing: Renmark Hotel per Rich J at ATD 428; CLR 16, General Steel Industries Inc v. Commissioner for Railways (NSW) (1964) 112 CLR 125 per Barwick CJ at 134, Re Anti-Cancer Council of Victoria ; Ex parte the State Public Services Federation (1992) 175 CLR 442 per Mason CJ, Brennan and Gaudron JJ at 450-451.

• It is not necessary for a person or body to be an authority that he, she or it have coercive powers, whether of an administrative or legislative character: Renmark Hotel per Rich J at ATD 430; CLR 18. Conversely the fact that a person or body has statutory duties or powers will not of itself suffice to characterise that person or body as an authority: Western Australian Turf Club per Stephen J at ATC 4137; CLR 297.

• At least where the question is whether a body is a 'public authority' the body must exercise control power or command for the public advantage or execute a function in the public interest: Silverton Tramways per Dixon CJ at ATD 297 and 298; CLR 565 and 567. The central concept is the ability to exercise power or command: the Fruit Marketing case per Gibbs J at 580.

Therefore, it is considered that you are an 'authority of the Commonwealth, a State or a Territory' and are an Australian government agency for the purposes of Division 81 of the GST Act.

3. Is the Fee a kind of fee prescribed by the GST Regulations?

Regulation 81-15.01 provides that for section 81-15 of the GST Act kinds of Australian fees and charges are prescribed.

It is considered that the Fee is covered by the GST Regulation.

Conclusion

The Fee satisfies the conditions in section 81-15 of the GST Act and it is not consideration for a supply. As such, GST is not payable in relation to the Fee.