Private ruling: GST and the supply of water
Date of advice: 11 July 2018
Published: September 2018

Ruling: Q1: Is the supply of water and transportation services to your customers where you have purchased the water from a main water supplier and on-supplied it to your customers by you in your own right GST-free? | A1: Yes, where you have purchased the water from a main water supplier and on-supplied it to your customers in your own right the supply of water and transportation services by you to your customers is GST-free under section 38-285 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for the following reasons. You are not subcontracted by the main water supplier to deliver the water as a part of an arrangement that the main water supplier has with customers. Nor are you an agent of the main water supplier to deliver the water on-behalf of them. Accordingly the main water supplier is not the supplier of water to your customers. In fact in this case, the main water supplier does not even know who the end recipient of their water is nor bills the customers for the water. You are the entity that is contracted by the customers (even though this contract is informal) to supply the water. Accordingly, given that you purchase water from the main water supplier and then on-supply the water to your customers in your own right to fulfil your obligation of supplying the water to your customer and bill the customers for the supply of water (which includes delivery services) it is our view that you are a supplier of water. The transportation service is an integral part of the agreement to supply water by you to your customers. Accordingly, it is our view that the supply of water (including the transportation services which form part of your supply of water) meets the requirements of section 38-285 of the GST Act and is therefore GST-free. Limitation of this ruling – water in a container that has a capacity of less than 100 litres This ruling does not apply to the supply of water in a container or transferred into a container that has a capacity of less than 100 litres.

Relevant facts and circumstances: You carry on an enterprise of delivering water to customers. When a customer needs water delivered to their water tanks they contact you and ask you to supply water. The customers do not approach any other entity (such as a main water supplier) for the supply of water. You do not have a formal written agreement with your customers. Your only agreement is a verbal agreement to supply water to your customers which includes transportation services. Accordingly your supply of water constitutes delivered goods such that delivery is integral, ancillary or incident to the supply of the goods as opposed to the delivery being significant and an aim in itself. The water is delivered in a 10,000 litre tanker and transferred into the customers’ water tank. Customer tanks range from 1,000 to 45,000 litres in capacity. Thus, the water that you supply is not supplied in a container or transferred into a container that has a capacity of less than 100 litres. You purchase the water that you deliver to your customers from a main water supplier. The main water supplier bills you for the water that they supply you each month. You do not have any agency or subcontract agreements with main water suppliers to supply water to your customers on-behalf of them. The main water supplier does not know who the end recipient of the water is. You on-supply the water that you purchase from the main supplier to your customers in your own right. You bill the customers for both the water and transportation services provided to them. The payment for the water is owed by the customers to you. The transportation services that you supply are part of the agreement to supply water to your customers. In the event the water bill is not paid by a customer, you will be the entity following up on the debts.

Relevant legislative provisions: Section 38-285 of the A New Tax (Goods and Services Tax) Act 1999