Private ruling: GST and government services
Published: May 2013

Ruling: Q1: Are the services subject to goods and services tax (GST)? | A1: No, the services are not subject to GST.

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. You are registered for goods and services tax (GST). A State Act confers or imposed functions on you. You have stated that a State entity engages you to perform various works. You invoice the entity for all these goods and services provided. You have stated that these services are not covered by a written agreement. You have stated that these payments are not covered by an appropriation under any Australian law.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 s ection 7-1 | A New Tax System (Goods and Services Tax) Act 1999 s ection 9-5 | A New Tax System (Goods and Services Tax) Act 1999 s ection 9-39 | A New Tax System (Goods and Services Tax) Act 1999 s ection 81-10 | A New Tax System (Goods and Services Tax) Act 1999 s ection 81-15 | A New Tax System (Goods and Services Tax) Act 1999 s ection 195-1 | A New Tax System (Goods and Services Tax) Regulations 1999 r egulation 81-15.01

Reasons for decision: Summary: The basic rules Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on supplies that are taxable supplies. As such, you are liable to pay the GST payable on any taxable supply you make. Section 9-5 of the GST Act defines a taxable supply as: You make a taxable supply if: · you make the supply for *consideration; and · the supply is made in the course or furtherance of an *enterprise you *carry on; and · the supply is *connected with Australia; and · you are *registered or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (*Asterisked terms are defined in the Dictionary under section 195-1 of the GST Act) You are registered for GST and make supplies in carrying on your enterprise in Australia. The issue that arises under section 9-5 of the GST Act is whether such supplies are supplies 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. The special rules Division 81 Sections 81-10 and 81-15 of the GST Act consider the effect of certain fees and charges. Of relevance in this case is section 81-15 of the GST Act and it states: 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. The term 'Australian fee or charge' is defined in section 195-1 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. GST Regulations The A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) were amended, with effect from 1 July 2012, to ensure that the GST treatment of supplies by Australian government agencies remained consistent with the principles agreed with the States. Regulation 81-15.01 of the GST Regulations sets out those fees and charges that are prescribed under section 81-15 of the GST Act and which do not constitute consideration for a supply. Because these fees and charges do not constitute consideration, the supplies to which they relate, if any, do not satisfy the requirements of section 9-5 of the GST Act and are not taxable supplies. GST Regulation 81-15.01 relevantly provides: 81-15.01 Fees and charges which do not constitute consideration (1) For section 81-15 of the Act, the following kinds of Australian fees and charges are prescribed: (d) a fee or charge to compensate an Australian government agency for costs incurred by the agency in undertaking regulatory activities; (f) a fee or charge for a supply of a regulatory nature made by an Australian government agency; The services you perform are imposed on you under a State Act and a service agreement. To the extent that these services are supplies that you make to the State, the supplies, if any, are regulatory activities or regulatory in nature. The payments you receive from the State for these services are not consideration for a supply under GST Regulation 81-15.01. Therefore, the requirements of paragraph 9-5(a) of the GST Act will not be satisfied and the supplies of these services are not taxable supplies.