ATO ID 2001/113: GST and Lease of a fishing quota
Date of decision: 24 March 2000
Business line: Indirect Tax

Issue
Is the entity, the holder of an 'individual transferable quota' in a fishery, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it leases its quota to another entity?

Decision
Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it leases its 'individual transferable quota' to another entity.

Facts
Certain species of fish are protected by a quota system. In order to fish for these protected species, it is a requirement to hold an 'individual transferable quota' (ITQ). The entity is the holder of a number of ITQ's which it leases out to other entities. The entity is registered for goods and services tax (GST). The transaction meets the other positive requirements of section 9-5 of the GST Act.

Reasons for decision
Summary: An entity makes a taxable supply where the requirements of 9-5 of the GST Act are satisfied. An essential element of a taxable supply is the making of a supply by an entity. The term 'supply' is broadly defined in subsection 9-10(1) of the GST Act as 'any form of supply whatsoever'. Paragraph 9-10(2)(e) of the GST Act further states that a 'supply' includes a creation, grant, transfer, assignment or surrender of any right. An ITQ consists of a bundle of rights which are transferable. The lease of these rights are therefore a supply within the specific meaning of the term under paragraph 9-10(2)(e) of the GST Act. Accordingly, the entity makes a supply when it leases its quota to another entity. The lease of the ITQ is a taxable supply in this case as the supply satisfies the requirements of a taxable supply under section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 subsection 9-10(1) paragraph 9-10(2)(e) Division 38 Division 40
Related ATO interpretative decisions: ATO ID 2001/114 | ATO ID 2001/115
Subject references: Goods and Services Tax GST primary production GST fishing GST supplies acquisitions GST supply Taxable supply