ATO Interpretative Decision

ATO ID 2011/106 (Withdrawn)

Goods and Services Tax

GST: Reduced credit acquisitions for delivery and collection of cash from ATMs located outside the operating area of an ADI
FOI status: may be released
  • This ATO ID is withdrawn, as it is no longer necessary. The ATO view expressed in this ATO ID is a straight application of the law and does not contain an interpretative decision
    This document has changed over time. View its history.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the acquisition of secure cash transportation services in relation to Automatic Teller Machines (ATMs), which are located at premises operated by an Australian Authorised Deposit-taking Institution (ADI), excluded as a reduced credit acquisition under item 29(a) in the table in subregulation 70-5.02(2) of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) as it is the 'cash delivery and collection from branches of Australian ADIs'?

Decision

Yes. The acquisition of secure transportation services in relation to ATMs, which are located at premises operated by an Australian ADI, is excluded as a reduced credit acquisition under item 29(a) in the table in subregulation 70-5.02(2) of the GST Regulations (Item 29(a)) as it is the 'cash delivery and collection from branches of Australian ADIs'.

Facts

An ADI contracts with a cash management provider for the management of the cash contained in the ATMs operated by the ADI.

Under the arrangement a secure cash transportation provider collects the cash cassette from the ATM. The spent cash cassettes are delivered to the warehouse of the cash management provider where the cassettes are re-loaded.

The re-loaded cash cassettes are used to replenish each ATM at the time the spent cassette is collected.

All cash used in the cash cassettes of the ATMs is owned by the ADI. The cash is not purchased by, or sold or transferred to, the cash management provider.

The ATMs are located at premises that is used by the ADI as a branch, but are outside the main operating area of the branch. The ATM is built into the structure of the premises. There is no ability for branch staff to access the machine.

Invoices issued by the cash management provider in relation to these services are not accounted for under the ADI's branch network.

Reasons for Decision

Item 29(a) includes the following as a reduced credit acquisition:

Item Reduced credit acquisition
29 Trustee and custodial services (except safe custody of money, documents and other things), including:

(a)
transfer of cash without purchase, sale or transfer of assets,

excluding cash delivery and collection from branches of Australian ADIs;
...

Paragraph 688 of Goods and Services Tax Ruling GSTR 2004/1: reduced credit acquisitions, deals with whether the acquisition of secure cash transportation services is a reduced credit acquisition. Specifically, it states:

An acquisition of a secure cash transport service is an acquisition of a custodial service under item 29 even though such an acquisition would not normally be provided by a trustee or a custodian

While the acquisition of secure cash transportation services may qualify as a reduced credit acquisition under Item 29, it is specifically excluded under item 29(a) where it is for the transportation of cash between branches of an Australian ADI.

In this case, the secure cash transportation services relate to the transportation of cash to and from ATMs which are located outside the main operating area of the branch and to which staff do not have access. However, the machines are built into the structure of the premises.

The word 'branch' is not defined in the A New Tax System (Goods and Services Tax) Act 1999 or the GST Regulations and therefore takes its ordinary meaning. The Macquarie Dictionary, 2001, rev. 3rd edn, Macquarie University, NSW relevantly defines 'branch' as:

4 . the local operating division of a company, chain store, library, or the like.

Therefore, the ordinary meaning of the word 'branch', in the context of the operations of an ADI, is the local operating division of an ADI.

The word 'branch,' as used by the financial services industry, is also considered. Whilst the word 'branch' is not defined in the relevant Acts which deal with the banking industry, the prudential regulatory authority, established under statute, has provided an understanding of the use of the word by Australian ADIs.

Relevantly the Australian Prudential Regulation Authority (APRA) in its ADI Points of Presence publication explains that the level of service provided at a branch of an ADI is 'face-to-face' service, including accepting and withdrawing cash and other deposits, account management and credit and other lending services.

Therefore, when taking into account the ordinary meaning, and the meaning accepted by the financial service industry, the word 'branch', for the purposes of Item 29(a), means a local operating division of an ADI. The operating division is a fixed location or premises, from which, as a minimum, face-to-face service is provided, including cash and other deposits and withdrawals, account keeping facilities and credit and other lending services.

It follows that the delivery and collection of cash cassettes to ATMs located at such premises is the 'cash delivery and collection from branches of Australian ADIs'.

Accordingly, the acquisition of such services are not reduced credit acquisitions under Item 29(a).

Date of decision:  14 December 2011

Legislative References:
A New Tax System (Goods and Services Tax) Regulations 1999
   subregulation 70-5.05(2) table Item 29(a)

Related Public Rulings (including Determinations)
Goods and Service Tax Ruling GSTR 2004/1

Related ATO Interpretative Decisions
ATO ID 2011/105

Other References:
The Macquarie Dictionary, 2001, rev. 3rd edn, Macquarie University, NSW
APRA 2011, ADI Points of Presence publication viewed on 13/12/2011 www.apra.gov.au

Keywords
Reduced credit acquisitions
Input taxed supplies
GST financial supplies

Siebel/TDMS Reference Number:  1-3MZFTC7

Business Line:  Indirect Tax

Date of publication:  23 December 2011

ISSN: :

history
  Date: Version:
  14 December 2011 Original statement
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