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Edited version of private advice
Authorisation Number: 1051635702889
Date of advice: 20 February 2020
Ruling
Subject: Nursery products levy and GST
Question
Is the recoupment from your customer of the nursery products levy paid to the Department of Agriculture subject to GST?
Answer
No. Based on the facts and circumstances provided, the nursery products levy is payable by the producers of potted plants, which are the nurseries in the current case. You are required by law to collect and pay the levy to the relevant government department. The nursery levy isprecluded from constituting consideration for a supply pursuant to Division 81 of the A New Tax System (Goods and Services Tax ) Act 1999 (GST Act).
Relevant facts and circumstances
You manufacture and wholesale starter pots to various nursery customers.
You pay a nursery products levy of X% to the Department of Agriculture on the GST exclusive price of each pot sold.
You include the amount of the levy payable as part of the sales invoice to the customers. The levy payable is separated from the GST inclusive price for the pots sold.
You are told by the Department of Agriculture that the levy is GST-free.
The nursery products levy is provided for under the Primary Industries (Excise) Levies Act 1999, and Primary Industries Levies and Charges Collection Act 1991.
Schedule 15 of the Primary Industries (Excise) Levies Act 1999 imposes the levy for horticultural products, which are defined to include nursery products within the Schedule.
In Schedule 5 of the Primary Industries (Excise) Levies Act 1999, under section 5 it says:
5 Who pays the levy
The levy imposed by this Schedule on leviable horticultural products is payable by the producer of the products.
The Department of Agriculture's website (https://www.agriculture.gov.au/, accessed on 12 February 2020) provides the following information under the heading 'Nursery Products levy':
A producer of potted plants, the person who places nursery products in a growing medium in containers or buys containers on behalf of a person who places nursery products in a growing medium in containers, is liable to pay the levy.
If you are a producer that imports containers from an overseas seller and uses them to produce potted plants, you must lodge a return and make a payment to the department.
If you purchase containers from a seller in Australia, you must pay the seller an amount on account of levy or penalty within three months after the end of the month in which you bought the containers.
If you are an Australian seller of containers, you must lodge a return and make a payment to the department.
A Levy Notice (LR180) issued by the previous Department of Agriculture, Fisheries and Forestry provides the following information regarding the arrangement for the collection of the nursery products levy:
The producer of the potted plants is liable to pay the levy. However, for ease of administration, the levy is collected from the producer by the seller of the nursery pots i.e. pot manufacturers, distributors and other persons who sell containers to producers of potted plants. These people must forward the levy to LRS along with return forms which are available from all LRS offices or by accessing our website at www.daff.gov.au/levies
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 Division 81