Private ruling: GST and application of Division 81 fees and charges
Published: May 2014

Ruling: Q1: Are payments of fees and charges to the Department consideration for a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: The payments of fees and charges to the Department are not consideration for a taxable supply under section 9-5 of the GST Act.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The Department is registered for goods and services tax (GST). The Department is an Australian government agency and levies fees and charges in accordance with its role in administering an Act and its Regulations. A description of the fees and charges and the relevant provisions in the Act that they are levied under was provided.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(1) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(2) | A New Tax System (Goods and Services Tax) Act 1999 Section 81-15

Reasons for decision: Detailed Reasoning - Taxable Supply: Section 9-5 of the GST Act provides that you make a taxable supply if: • you make the supply for consideration • the supply is made in the course or furtherance of an enterprise that you carry on • the supply is connected with Australia, and • you are registered or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. The first criterion that needs to be determined is whether there is a supply for consideration. Section 9-39 of the GST Act provides special rules in relation to making taxable supplies. In particular, item 8 in the table in section 9-39 of the GST Act provides that where there is a payment of taxes, fees and charges the special rules in Division 81 of the GST Act may apply. | Detailed Reasoning - Division 81: Division 81 of the GST Act was amended with effect from 1 July 2011 to allow entities to self-assess the GST treatment of a payment of an Australian tax or an Australian fee or charge in accordance with certain principles. Under the transitional arrangements, those Australian taxes, fees and charges that were not subject to GST under the A New Tax System (Goods and Service Tax ) ( Exempt Taxes, Fees and Charges) Determination 2011 (No. 1 ) (Treasurer's Determination) remain not subject to GST until 30 June 2013 and thereafter will be assessed under Division 81 as amended. The GST treatment of all Australian taxes or Australian fees or charges that were not listed in the Treasurer's Determination will be self-assessed under the changes made to Division 81 with effect from 1 July 2011. | Detailed Reasoning - Australian Fees and Charges: Sections 81-10 and 81-15 of the GST Act consider the effect of certain fees and charges and state: | Detailed Reasoning - 81-10 Effect of payment of certain fees and charges: Certain fees and charges not consideration (1) A payment, or the discharging of a liability to make a payment, is not the provision of *consideration to the extent the payment is an *Australian fee or charge that is of a kind covered by subsection (4) or (5). Prescribed fees and charges treated as consideration (2) However, a payment you make, or a discharging of your liability to make a payment, is treated as the provision of consideration to the extent the payment is an *Australian fee or charge that is, or is of a kind, prescribed by the regulations. (3) For the purposes of subsection (2), the consideration is taken to be provided to the entity to which the fee or charge is payable, for a supply that the entity makes to you. Fees or charges paid for permissions etc. (4) This subsection covers a fee or charge if the fee or charge: (a) relates to; or (b) relates to an application for; the provision, retention, or amendment, under an *Australian law, of a permission, exemption, authority or licence (however described). Fees or charges relating to information and record-keeping etc. (5) This subsection covers a fee or charge paid to an *Australian government agency if the fee or charge relates to the agency doing any of the following: (a) recording information; (b) copying information; (c) modifying information; (d) allowing access to information; (e) receiving information; (f) processing information; (g) searching for information. | Detailed Reasoning - 81-15 Other fees and charges that do not constitute consideration: The regulations may provide that the payment of a prescribed *Australian fee or charge, or of an Australian fee or charge of a prescribed kind, or the discharging of a liability to make such a payment, is not the provision of *consideration. (*Asterisked terms are defined in section 195-1 of the GST Act). The term 'Australian fee or charge' is defined in section 195-1 of the GST Act as: Australian fee or charge means a fee or charge (however described), other than an Australian tax, imposed under an *Australian law and payable to an *Australian government agency. | Detailed Reasoning - Australian Law: The term 'Australian law' is defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) and relevantly includes a State law. It includes Acts and law making powers which are delegated by parliaments, such as regulations, by-laws, proclamations and orders made under Acts. For the purposes of this Ruling, the Act administered by the Department is an Australian law. | Detailed Reasoning - Australian Government Agency: The term 'Australian government agency' is defined by section 995-1 of the ITAA 1997 to mean: • the Commonwealth, a State or Territory; or • an authority of the Commonwealth or of a State or a Territory. For the purposes of this Ruling, it is accepted that the Department comes within the definition of an Australian government agency. | Detailed Reasoning - Fees and charges covered by subsections 81-10(4) and (5) of the GST Act: Under subsection 81-10(1) of the GST Act, Australian fees and charges of the kind covered by subsections 81-10(4) and (5) of the GST Act are not the provision of consideration. Subsection 81-10(4) of the GST Act covers fees and charges that are paid in relation to (or in relation to an application for) permissions, exemptions, authorities and licences. It is considered that some payments to the Department are not the provision of consideration under subsection 81-10(1) of the GST Act as they are covered by subsection 81-10(4) of the GST Act. As these payments are not consideration, a supply to which they may relate will not be a taxable supply unless the payment is also of a kind covered by subsections 81-10(2) and (3) of the GST Act. Subsections 81-10(2) and (3) of the GST Act do not apply in this case. | Detailed Reasoning - A fee or charge that is not consideration for a supply under the GST Regulations: Section 81-15 of the GST Act provides that where a government fee or charge is prescribed by regulation, the payment of the fee or charge is not treated as the provision of consideration. Regulation 81-15.01 of the GST Regulations sets out those fees and charges that are prescribed for section 81-15 of the GST Act and which do not constitute consideration. Of relevance to this ruling are paragraph 81-15.01(1)(d) and paragraph 81-15.01(1)(f) of the GST Regulations. Paragraph 81-15.01(1)(d) of the GST Regulations refers to 'a fee or charge to compensate an Australian government agency for costs incurred by the agency in undertaking regulatory activities'. The explanatory statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No. 2) (ES) states: This paragraph ensures that fees and charges which are for services provided on a cost recovery basis by government agencies, and relate to activities that are regulatory in nature, are not treated as the provision of consideration and therefore do not give rise to a taxable supply… Paragraph 81-15.01(1)(f) of the GST Regulations refers to 'a fee or charge for a supply of a regulatory nature made by an Australian government agency'. The term 'regulatory nature' is not defined in the GST Regulations or the GST Act. The ES states: The term 'regulatory' captures those supplies made by a government agency, where that agency is legislatively empowered to make the relevant supply and the supply is to satisfy a regulatory purpose. In some instances, although the consumer acquires something that may be of intrinsic value to the consumer, the acquisition is made in the context of satisfying a regulatory requirement of an Australian law… The ES provides the following examples of fees and charges for supplies that have a regulatory character: A fee or charge for providing a copy of a birth, death or marriage certificate; A compulsory inspection fee for checking that the foundations of a building comply with a building code; … A fee for the supply and fitting by a government department of a compulsory device to limit the speed of a heavy road transport vehicle; … Fees and charges imposed by an Australian government agency associated with: Towing and impounding a vehicle where the driver has committed a traffic offence; … It is considered that some of the payments of fees and charges to the Department are not the provision of consideration under section 81-15 of the GST Act by virtue of either paragraph 81-15.01(1)(d) or paragraph 81-15.01(1)(f) of the GST Regulations.