Edited version of private advice

Authorisation Number: 1052028379717

Date of advice: 5 September 2022

Ruling

Subject: GST - supplies between tax law partners

Question

Does the XXX make taxable supplies to its XXX (XXX) when it charges them a fee for XXX services?

Answer

Yes. The supplies made by XXX to the XXX (XXX) are taxable as all requirement under section 9-5 of the GST Act are met

This ruling applies for the following periods:

DD MM YYYY - DD MM YYYY

DD MM YYYY - DD MM YYYY

DD MM YYYY - DD MM YYYY

DD MM YYYY - DD MM YYYY

The scheme commences on:

1 July 20YY

Relevant facts and circumstances

XX (You) are registered for GST and have been since DD MM YYYY.

You are a registered as a XXX with the Australian Tax Office involving the following XXX:

•                     XXX

•                     XXX

•                     XXX

•                     XXX

•                     XXX

On DD MM YYYY the XXX entered into an agreement known as "XXX"

This was originally preceded by an agreement dated DD MM YYYY which includes a XXX signed in XXXX.

This agreement was for an XXX which operated until XXX.

This site is now in a XXX and in turn means it will undergo XXX at the cost of the XXX.

XXX is responsible for the day-to-day activities with XXX stating the XXX "XXX".

The XXX has income from XXX for the XXX to the XXX and XXX of XXX, for which the XXX subsequently receive XXXX.

The XXX services for the former XXX include:

XXX

The XXX are billed on a proportionate basis for the XXX services to these percentages:

•                     XXX

•                     XXX

•                     XXX

•                     XXX

•                     XXX

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 section 9-10

Reasons for decision

ATO view and legislative background

Taxable Supplies

Section 9-5 of the GST Act provides you make a taxable supply if:

(a) you make the supply for consideration.

(b) the supply is made in the course or furtherance of an enterprise that you carry on

(c) the supply is connected with the indirect tax zone; and

(d) you are registered, or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

Meaning of supply

(1) A supply is any form of supply whatsoever.

(2) Without limiting subsection (1), supply includes any of these:

(a) a supply of goods;

(b) a supply of services;

(c) a provision of advice or information;

(d) a grant, assignment or surrender of * real property;

(e) a creation, grant, transfer, assignment or surrender of any right;

(f) a * financial supply;

(g) an entry into, or release from, an obligation:

(i) to do anything; or

(ii) to refrain from an act; or

(iii) to tolerate an act or situation;

(h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g).

The supply of services to the XXX will be a supply for the purposes of Section 9-5. This supply is a taxable supply as it has been made for consideration, in the course of furtherance of your enterprise, is connected to the indirect tax zone and you are registered for GST.

Joint Ventures

It is not accepted the XXX between the XXX is a joint venture because it does not meet the requirements of Section 51-5 of the GST Act.

GSTR 2004/6

Goods and Services Tax Ruling GSTR 2004/6 Goods and services tax: tax law partnerships and co-owners of property (GSTR 2004/6) confirms supplies between tax law partners can be made.

Tax law partnerships

8. A partnership is defined in section 195-1 of the GST Act by reference to the definition of 'partnership' in subsection 995-1(1) of the ITAA 1997. [7] That definition states:

Partnership means:

(a) an association of persons (other than a company or a limited partnership) carrying on business as partners or in receipt of ordinary income or statutory income jointly; or

(b) a limited partnership.

9. The first limb of paragraph (a) of the definition refers to 'an association of persons (other than a company or a limited partnership) carrying on business as partners'. This reflects the general law definition of a partnership, which is 'the relation which subsists between persons carrying on a business in common with a view of profit'. [8] We refer to this type of partnership as a general law partnership.

10. The second limb of paragraph (a) of the definition includes as a partnership an association of persons (other than a company or a limited partnership) 'in receipt of ordinary income or statutory income jointly'. We refer to this type of partnership as a tax law partnership.

It is accepted XXX is a tax law partnership as, while it is registered as a XXX with the Australian Tax Office, the XXX do not carry on any business specifically where 'the relation which subsists between persons carrying on a business in common with a view of profit' and is therefore not a common-law partnership.

Supplies by an enterprise partnership to a partner

132. During its operation, a registered partnership may make supplies to a partner that are taxable. The supply is a taxable supply if it satisfies the requirements of section 9-5. The partnership may also make supplies that are GST-free or input taxed.