Private ruling: GST Government taxes, fees and charges
Published: May 2014

Ruling: Q1: Are payments made to you consideration for a taxable supply? | A1: No, payments made to you are not consideration for a taxable supply.

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).

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 81-5(1)

Reasons for decision: Summary: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides when you make a taxable supply. However, 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: Section 81-5 of the GST Act considers the effect of the payment of a tax. It states: | Detailed Reasoning - 81-5 Effect of payment of tax: Australian tax 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 tax. Regulations may provide for exceptions (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 tax 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 tax is payable, for a supply that the entity makes to you. The term 'Australian tax' is defined in section 195-1 as: Australian tax means a tax (however described) imposed under an *Australian law. A payment to you of a charge for a charge is not for an identified service provided .It is made to the community as a whole for the supply. Once a charge is made under the LG Act, it is enforceable by law. It is considered that the charge is an Australian tax and satisfies subsection 81-5(1) of the GST Act. As such, the payments made to council for the WIC is not consideration for a taxable supply.