GST issues registers

Property and construction

Section 17 - sundry issues

View history of section 17

(a) added, (u) updated, (w) withdrawn

17.1 The GST Rulings system

This issue has been withdrawn. For information about the GST rulings system please refer to the ATO website at www.ato.gov.au and search for either 'GST public rulings' or 'GST private rulings'.

17.2 When associations arrange membership concessions on services such as mobile telephones or fuel, who will be subject to GST liability?

For source of ATO view, refer to GSTR 2000/19 - Goods and services tax: making adjustments under Division 19 for adjustment events

ATO position

The position of the association, supplier of the service and member must be considered separately if the mobile phone or fuel suppliers are registered or required to be registered for GST purposes, the suppliers will be making a taxable supply to the members when those members access the services and provide consideration in return. The supplier will be liable for the GST.

Where the association will be receiving benefits from the mobile phone or fuel suppliers because it grants a right to the suppliers (such as access to the membership details), the association has made a supply to the mobile phone or fuel suppliers. If the association is registered or required to be registered for GST purposes, the supply will be a taxable supply, and the association will be liable for GST on this supply.

17.3 Is construction equipment which is working and registered for road use eligible for Diesel Fuel Credits?

This issue has been withdrawn as the diesel fuel rebate scheme (off-road scheme) and the diesel and alternative fuels grants scheme (on-road scheme) were replaced on 1 July 2003 by the energy grants credits scheme. For information about the new scheme, refer to the ATO website at Energy grants credits scheme (NAT 9004) - WITHDRAWN.

17.4 What is the GST treatment of rubber tyred construction equipment (such as mobile cranes) which is purchased by a contractor in the carrying on of its business?

Non-Interpretative - straight application of the law

ATO position

Each of the following rubber tyred construction equipment are not considered to be 'motor vehicles' for the purpose of section 20 of the Transition Act where they are designed to perform a function unrelated to public road use and their ability to travel on a public road is merely incidental to that design:

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motor graders

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backhoe/ loaders

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skidsteer/ loaders

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telescopic materials handlers

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rubber tyred loaders

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mobile cranes

GST input taxed credits are available for a purchase or importation of plant and equipment on or after 1 July 2000 for creditable purposes provided that the company is registered for GST.

However, if you buy the construction equipment after 1 July 2000, you will pay a 10% GST of the value of the construction equipment. Where you import plant and equipment, its value is the sum of the customs value, the amount paid for transport and insurance, and the customs duty paid or payable.

No credit is allowed for sales tax paid on the purchase of plant and equipment prior to 1 July 2000.

17.5 Are fees paid for membership of an Australian industry association or union of employers subject to GST?

Non-Interpretative - straight application of the law

ATO position

Yes, if the industry association or union charging the membership fee is registered, or required to be registered, for GST. A supply of membership by a GST registered

association or union is a taxable supply under section 9-5 of the GST Act.

17.6 How are embedded tax savings to be handled? Are there any Industry projections as to what might be considered reasonable and how fees should be adjusted to recognise these savings before the application of the GST?

This issue has been withdrawn as it does not concern the administration of the GST law. Information about how fees and prices should be adjusted for GST may be obtained from the ACCC on 1300 302 502.

17.7 Division 81 Determination - the exemption of certain fees and charges from GST.

Non-interpretative - straight application of the law.

For the administrative treatment of fees and charges under Division 81, refer to PS LA 2013/2 (GA) GST treatment of Australian fees or charges under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999, which was issued on 13 June 2013.

This issue previously stated:

ATO position

Where a tax, fee or charge is listed in the Treasurer's Determination under Division 81 of the GST Act, and it is paid by a person to discharge the liability to pay it, it is not consideration for a taxable supply and therefore is not subject to GST. If that tax, fee or charge is incurred by a registered entity, the payment becomes a business cost for that entity. The cost is then included in subsequent supplies made by that entity. In these subsequent supplies, the nature of the payment of the tax, fee or charge has changed and will be subject to the normal GST rules.

Where a person incurs an expense as an agent for an entity, then seeks reimbursement of that expense, if it is the reimbursement of a tax, fee or charge that is covered by the Treasurer's Determination under Division 81 of the GST Act, it will not be subject to GST.

For example, rates for a rental property are an expense incurred by a landlord as owner of the property. The landlord may pass on these costs to a tenant, but is not acting as agent for the tenant when making the initial payment of the rates. However, if a real estate agent paid these expenses on behalf of a landlord then sought reimbursement, the reimbursement to the agent would not be subject to GST.

17.8 Is the sale of a share issued under a 'company title' arrangement that entitles the shareholder to exclusive occupation of a home unit a supply of residential property?

For source of ATO view, refer to paragraphs 44 to 49 of GSTR 2003/3 - Goods and services tax: when is a sale of real property a sale of new residential premises?

ATO position

No. It is the sale of a share that may be input taxed as a financial supply. For information about the GST implications of converting company title to strata titled residential property, see GSTR 2003/3.

17.9(a) What is the meaning of the words 'land on which there are no improvements' and 'no improvements on the land' for the purposes of sections 38-445 and 38-450 of the GST Act?

Non-Interpretative

Refer to GSTR 2006/6.

17.9(b) Sections 38-445 and 38-450 of the GST Act both refer to the entitlement of the recipient to the grant of a freehold interest in the land once certain lease conditions have been satisfied by the recipient. When does the ATO consider that the recipient is entitled to a grant of a freehold interest in land in such cases?

Non-Interpretative - straight application of the law

ATO position

Paragraphs 38-445(1A)(d) and 38-450(1)(b) of the GST Act both refer to the entitlement of the recipient to receive the supply of a freehold interest consequent on the satisfaction by the recipient of certain lease conditions.

It is common for legislation providing for such grants to state that the grant always remains subject to ultimate Ministerial consent. This is largely an administrative provision.

For the purposes of sections 38-445 and 38-450 of the GST Act, the recipient is deemed to be entitled to the supply of the grant of a freehold interest if the recipient satisfies all of the conditions in the lease required to be satisfied to enable the grant to be made, without having regard for the formal requirement of Ministerial consent.

17.10 What is the meaning of the words 'the Commonwealth, a State or a Territory' contained in section 38-445 (grants of freehold and similar interests by governments) and section 75-10 (sale of freehold interests etc) of the GST Act?

Non-interpretative

Refer to GSTR 2006/5.

17.11 Are supplies made by an individual under a PAYG voluntary agreement included in the calculation of the GST turnover for GST registration purposes?

For source of ATO view, refer to GSTR 2001/7 - Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover

ATO position

Yes. Even though supplies made under a PAYG Voluntary Agreement may not be taxable supplies because of Division 113 of the GST Act*, they are not excluded from the calculation of the GST turnover for GST registration purposes. Non taxable supplies are not excluded from the calculation unless they are:

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supplies that are input taxed, or

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supplies that are not for consideration (and are not taxable supplies), and

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supplies that are not made in connection with the carrying of an enterprise (sections 188-15 and 188-20).

Because a PAYG voluntary agreement can only be entered into by an individual who is carrying on an enterprise of providing services for payment, the supplies made under such an agreement are made in the course of the individual's enterprise and for consideration. And a supply of these services is not input taxed under Division 40 of the GST Act. Therefore, the supplies do not fall within any of the exclusions above.

(* Division 113 of the GST Act provides that a supply made under a PAYG Voluntary Agreement is not a taxable supply if the acquisition of the supply by the other entity would otherwise be a fully creditable acquisition.)

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