ATO ID 2004/608: GST and removal of waste matter from traps, pits and tanks on commercial premises
Date of decision: 30 August 2002
Business line: Indirect Tax

Issue
Is the entity, a business operator, making a GST-free supply under section 38-290 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a service of removing, and then disposing of, waste matter from a commercial premises' traps, pits and tanks that are connected to the sewer system?

Decision
No, the entity is not making a GST-free supply under section 38-290 of the GST Act when it supplies a service of removing and then disposing of waste matter from a commercial premises' traps, pits and tanks that are connected to the sewer system. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts
The entity is a business operator. The entity supplies a service of removing and then disposing of waste matter from a client's commercial premises. The client collects non-toxic waste matter, which is not of a kind that is normally allowed by law to be disposed of directly into the sewer lines, in its traps, pits and tanks. These traps, pits, and tanks are connected to the sewer system and are not septic tanks. To dispose of the waste matter, which is in the form of a sludge, the entity pumps the waste matter into its tankers and takes the waste matter to a treatment plant. The entity does not clean the traps, pits, and tanks. The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

Reasons for decision
Summary: Section 38-290 of the GST Act provides that certain supplies of sewerage and sewerage-like services are GST-free. Under subsection 38-290(1) of the GST Act, a supply of sewerage services is GST-free. Paragraph 39 of Goods and Services Tax Ruling GSTR 2000/25 provides that a supply of 'sewerage services' is the supply of a service that enables an end recipient to discharge waste water, including water containing human waste, into a network of sewer pipes connected to the recipient's premises. The entity's supply is the removal of waste matter from traps, pits, and tanks by pumping the waste matter into the entity's tankers and taking it to a treatment plant. The entity's service does not enable the client to discharge waste water, including water containing human waste, into a network of sewer pipes connected to the client's premises. Therefore, the entity's supply is not a supply of sewerage services under subsection 38-290(1) of the GST Act. Under subsection 38-290(2) of the GST Act, a supply of removing waste matter from residential premises is GST-free in certain circumstances. The entity's supply is made from the client's commercial premises and not from residential premises. As such, subsection 38-290(2) of the GST Act does not apply. Under subsection 38-290(3) of the GST Act, a supply of servicing a domestic self-contained sewage system is GST-free. The entity's supply is not for a domestic self-contained sewerage system and subsection 38-290(3) of the GST Act does not apply. The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision in Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies a service of removing and then disposing of waste matter from a commercial premises' traps, pits and tanks that are connected to the sewer system.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 section 38-290 subsection 38-290(1) subsection 38-290(2) subsection 38-290(3) Division 38 Division 40
Related public rulings and determinations: Goods and Services Tax Ruling GSTR 2000/25
Subject references: Goods and services tax GST free GST water, sewerage & drainage Emptying of septic tanks Supply of sewerage services GST supplies & acquisitions Taxable supply