ATO ID 2001/114: GST and Sale of 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 sells its quota to another entity?

Decision
Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it sells 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 an ITQ which it is selling to another entity. 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 section 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 sale 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 sells its quota to another entity. The sale of the ITQ is a supply in this case as the supply satisfies the other 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 2001/113 | ATO ID 2001/115
Subject references: Goods and Services Tax GST primary production GST fishing GST supplies acquisitions GST supply Taxable supply