Private ruling: GST - supply for consideration
Date of advice: 1 August 2024
Published: 9 September 2024
Ruling period: 15 July 2024 to 14 July 2028

Ruling: Q1: Is the monthly payment provided to you by an entity consideration for a supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, the monthly payment provided to you by the entity is not consideration for a supply under section 9-5 of the GST Act.

Relevant facts and circumstances: You are an Australian government agency. You receive payments from an entity pursuant to legislation. You are developed and maintained by these payments. The entity is situated on a site owned by the state government. You are responsible for the management and control of the site. The legislation details an agreement entered into between the state government and the entity. The payments are conditional on you managing and controlling the site. You receive correspondence from the entity detailing the monthly payment amount. You do not have a lease agreement with the entity.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5

Reasons for decision: Detailed Reasoning - Taxable supplies: GST is payable on taxable supplies. Under section 9-5 of the GST Act, you make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with Australia; and (d) 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. (* Denotes a term defined in section 195-1 of the GST Act) All the above requirements must be met for a supply that you make, to be a taxable supply. The first requirement is whether the payment made by casino is consideration for a supply the board makes (paragraph 9-5(a) of the GST Act). | Detailed Reasoning - Supply: 'Supply' is defined under section 9-10 of the GST Act to include any form of supply whatsoever and covers both goods and services. This is defined broadly and is intended to encompass supplies as widely as possible. There is a supply of services relating to the management and control of the site under legislation. You provide services to ensure that the site remains attractive and accessible to all visitors. | Detailed Reasoning - Sufficient nexus between the supply and consideration: Consideration is defined in section 195-1 to mean 'any consideration, within the meaning given by section 9-15 and 9-17, in connection with the supply.' There are two elements to the definition of consideration, the first being payment by one entity to another. The second element is that a nexus must be established between the payment and supply. Paragraphs 55 to 57 Goods and Services Tax Ruling; Goods and services tax: non-monetary consideration (GSTR 2001/6) discusses whether the supply is made for consideration and the nexus test. It will not be sufficient for there to be a supply and a payment. GST is not payable on a supply unless it is made for consideration. There needs to be a sufficient connection between the payment and the supply. Paragraphs 64 to 72 of GSTR 2001/6 explains the application of the nexus test in Australia and states: 64. A supply is not subject to GST in Australia unless it is made for consideration. Consideration 'for a supply or acquisition' is defined in section 195-1 as any consideration, within the meaning given by section 9-15 and 9-17, that is 'in connection with the supply or acquisition.' ... 67. In a similar fashion to the GST legislation in New Zealand, the nature of the nexus required between supply and consideration is specified in the definition of consideration. A payment will be consideration for a supply if the payment is 'in connection with', 'in response to' or 'for the inducement' of a supply. 68. In determining whether a payment is consideration under subsection 9-15(1), the test is whether there is a sufficient nexus between the supply and the payment made. ... 71. In determining whether a sufficient nexus exists between supply and consideration, regard needs to be had to the true character of the transaction. An arrangement between parties will be characterised not merely by the description that parties give to the arrangement, but by looking at all of the transactions entered into and the circumstances in which the transactions are made. 72. The test as to whether there is a sufficient nexus is an objective test. The motive of the supplier and the recipient also may be relevant in determining whether the supply was made for consideration if a reasonable assessment of the evidence supports that motive. Paragraph 180B of GSTR 2006/9 further states: 180B. Further, in identifying the character of the connection, the word 'for' ensures that not every connection between supply and consideration meets the requirements for a taxable supply. That is, merely having any form of connection of any character between a supply and payment of consideration is insufficient to constitute a taxable supply. | Detailed Reasoning - Application to the circumstances: You were established to maintain the surrounding areas. There is an insufficient nexus between consideration paid by the entity and any supply made by you. Consequently, paragraph 9-5(a) of the GST Act is not satisfied as the supply is not made for consideration. Therefore, your supply of services is not a taxable supply and no GST is payable on the supply of those services.