Private ruling: Automatic teller machine (ATM) services
Date of advice: 7 March 2019
Published: May 2019

Ruling: Q1: Do you make input taxed financial supplies under section 40-5 of the A New Tax System (Goods and Services Tax) Act 1999 when you supply fee-free ATM services of a withdrawal from an account to cardholders who are not your customers? | A1: No, you are not making input taxed financial supplies when you supply fee-free ATM services of a withdrawal from an account to cardholders who are not your customers.

Relevant facts and circumstances: ● You are registered for goods and services tax (GST). ● You are an Australian authorised deposit-taking institution (ADI) within the meaning of section 9 of the Corporations Act 2001. ● You advised that there are no underlying agreements between you and the other parties in regard to you not directly charging fees to non-customers using your ATMs (including any mutual agreements not to charge another parties customers with the agreement, expectation or understanding that they do not charge your customer). ● You advised that you do not receive any third party payments for the provision of ATM services to non- customers. ● You own the ATM’s. ● For the withdrawals in question, you are the acquirer in the ATM payment system. ● ATM services to non- customers for the purposes of this ruling means cash withdrawals.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 sections 9-5 and 40-5 | A New Tax System (Goods and Services Tax) Regulations 1999 regulation 40-5.09

Reasons for decision: Summary: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that 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 the indirect tax zone, 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. Section 40-5 of the GST Act provides that a financial supply, as defined in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations), is input taxed. GST Regulation 40-5.08 states that for this purpose, a supply is a financial supply if the supply is mentioned as: ● a financial supply in regulation 40-5.09 or ● an incidental financial supply in regulation 40-5.10. Paragraphs 28 to 30 of GSTR 2002/2 (which sets out the Commissioner’s views on the GST treatment of financial supplies and related supplies and acquisitions) explains what is meant by the ‘provision, acquisition or disposal of an interest’ 28. The provision, acquisition or disposal of an interest mentioned in subregulation 40-5.09(3) or (4) is a financial supply where it satisfies the requirements of subregulation 40-5.09(1). 29. Allotment, creation, grant or issue of an interest is regarded as provision of the interest. Disposal of an interest includes assignment, transfer and surrender of the interest. Acquisition in relation to the provision or disposal of an interest includes acceptance and receipt of the interest. 30. The provision, acquisition or disposal of the interest mentioned in subregulation 40-5.09(3) or (4) must be: ● for consideration; ● in the course or furtherance of an enterprise; and ● connected with Australia. Relevant to this case is whether an ‘interest’ exists in the following items in Table to GST regulation 40-5.09(3). | Detailed Reasoning - An interest in or under…: 1 An account made available by an Australian ADI (authorised deposit-taking institution) in the course of: (a) its banking business within the meaning of the Banking Act 1959 ; or (b) its State banking business 2 A debt, credit arrangement or right to credit, including a letter of credit… Item 3 in Part 1 of Schedule 7 of the GST Regulations, includes ATM operation of accounts as an example of an interest under item 1 of regulation 40-5.09(3). The Commissioner considers in this case that the provision of ATM cash withdrawal services by you to non- cardholders is not the ‘provision, acquisition or disposal of an interest’ for the purposes of the GST regulations on the basis that you do not make available an interest in or under an account to the cardholder. This can be distinguished from circumstances where you provide cash withdrawal services from an ATM to your cardholder which is the ‘provision, acquisition or disposal of an interest in or under an account’ for the purposes of the GST regulations (regardless of whether a fee is charged or not). In this case it is necessary to consider subregulations 40-5.09(4) and 40-5.09(4A) of the GST Regulations. | Detailed Reasoning - Subregulation 40-5.09(4A) of the GST Regulations: Subregulation 40-5.09(4A) specifically designates the supply of ATM services (including the withdrawal from the account) for a fee of not more than $1,000 as being a financial supply notwithstanding that the supply of ATM services to a non-account holder does not involve the supply of an financial interest (Footnote 22A in GSTR 2002/2). Goods and Services Tax Ruling GSTR 2014/2 Goods and services tax: treatment of ATM service fees, credit card surcharges and debit card surcharges (GSTR 2014/2) provides the Commissioner’s view in relation to ATM service fees. Paragraphs 3 to 5 of GST 2014/2 provide that: 3. Under subregulation 40-5.09(4A) of the GST Regulations, a supply by an entity for a fee of not more than $1,000 is a financial supply if it is a supply of one or more of the following ATM services: ● a withdrawal from an account ● a deposit into an account ● an electronic transfer from an account; ● advice of the balance of an account. 4. The term 'ATM services' in subregulation 40-5.09(4A) of the GST Regulations restricts the listed services to those performed through the use of an automatic teller machine (ATM). 5. The term 'ATM' refers to an automatic teller machine that is used in the payment system designated by the Reserve Bank of Australia (RBA) as the ATM system. It takes its meaning from the following definition set out in the Consumer Electronic Clearing System (CECS) Manual: ATM means an approved electronic device capable of automatically dispensing Cash in response to a Cash withdrawal Transaction initiated by a Cardholder. Other Transactions (initiated by a debit card) such as funds transfers, deposits and balance enquiries may also be supported. The device must accept either magnetic stripe Cards or smart (chip) Cards where Transactions are initiated by the Cardholder keying in a Personal Identification Number (PIN). Limited service devices (known as 'Cash dispensers') that only allow for Cash withdrawal are included. Paragraph 6 of GSTR 2014/2 states that a fee imposed for an ATM service listed under subregulation 40-5.09(4A) of the GST Regulations is consideration for an input taxed supply. You advised that you do not charge non customers to use your ATMs. Further, you do not receive any payments from a third party such as the cardholder’s financial institution. Therefore where you do not charge a fee for supplying ATM withdrawal services subregulation 40-5.09(4A) of the GST Regulations does not apply in to designate the supply of ATM withdrawal services as being input taxed. | Detailed Reasoning - Subregulation 40-5.09(4) of the GST Regulations: Under subregulation 40-5.09(4) of the GST Regulations a supply of a service by an Australian ADI to a non-account holder for a fee of $1,000 or less will be treated as an input taxed supply. For the same reasons as noted above in our discussion on subregulation 40-5.09(4A), where you do not receive a fee for your supply of ATM services to non- customers subregulation 40-5.09(4) of the GST Regulations does not apply. | Summary: You are not making an input taxed financial supply when you supply fee-free ATM withdrawal services to cardholders who are not your customers.