Private ruling: GST status of your proposed consolidated licence fee
Published: June 2012

Ruling: Q1: Are the fees or charges imposed by you fees or charges relating to a permission, authority or licence under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore not consideration for a taxable supply? | A1: Yes.

Relevant facts and circumstances: You are a Commonwealth body corporate established under relevant legislation. As part of your responsibility for administering the export controls, you grant various licences and permits. Obtaining an export licence and complying with the conditions of exports (such as being issued with an export certificate for each product) are compulsory for an entity to be able to legally export the relevant products. You administer these export controls to fulfil your statutory responsibilities as stipulated under the legislation. You are empowered under your legislation to charge such fees as are fair and proper to enable you to meet costs incurred in administering licensing arrangement relating to the exports (including costs in relation to the grant or renewal of licences) and in ensuring that persons who are licensed to export comply with the conditions under which the export is permitted. You are also able to charge for the provision of services or the performance of work you do, and also to waive the payment of fees and charges payable to you. Currently you charge multiple fees. These cover application, renewal, continuing approvals, and various evidentiary certificates. Charges under the current fee structure are not listed in the A New Tax System (Goods and Services Tax)(Exempt Taxes, Fees and Charges) Determination 2011 (No. 1) (the Determination) and you remit GST on these charges. You are now proposing to charge a single fee that will cover all the various activities previously covered. All your fees are set on a cost recovery basis. You seek confirmation whether the single fee is considered an Australian fee or charge paid for a permission under section 81-10(4) of the GST Act, and therefore not consideration for a supply (such that GST will not apply).

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Division 81 | Section 195-1

Reasons for decision: Summary: The fees charged for the listed supplies relate to a permission, authority or licence. The charges are of a regulatory nature, and therefore under Division 81 are not consideration for a supply. | Detailed Reasoning - Background: When the GST was introduced the Commonwealth, states and territories agreed that the GST would apply to the commercial activities of government at all levels, but that the non-commercial activities of government would be outside the scope of the GST. Until 1 July 2011, payment of Australian taxes, fees and charges were treated as consideration for a supply, except to the extent that the Australian tax, fee or charge was listed in the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 1) (the determination). As a transitional measure, fees and charges listed in the Treasurer's determination as at 30 June 2011 remain exempt until 1 July 2012. Further grandfathering provisions have been proposed in draft regulation 81-15.01 (available on the Treasury website) to extend the application of the determination until 1 July 2013. We note that your current charges are not listed under the determination. Division 81 of the GST Act was amended effective 1 July 2011. It is legislation to enact the intention that regulatory charges that do not relate to particular goods or services will be exempt from GST, including licences, permits and certifications that are required by government prior to undertaking a general activity. In this context, Division 81 of the GST Act allows entities to self assess the GST treatment of a payment of an Australian fee or charge in accordance with certain principles. Specifically, section 81-10 of the GST Act considers the effect of payment of certain Australian fees and charges. | Detailed Reasoning - Proposed single license fee: An Australian fee or charge is a fee or charge (however described), other than an Australian tax, imposed under an Australian law and payable to an Australian government agency (section 195-1 GST Act). An Australian law means a Commonwealth, state or territory law, and Australian government agency means the Commonwealth, a state or territory, or an authority of the Commonwealth or of a state or territory (section 195-1 GST Act, as defined by reference to section 995-1, Income Tax Assessment Act 1997 ). In your circumstances you have imposed certain fees relating to your regulatory activities for certain exports. You are authorised by legislation, which we consider to be an Australian law, to set fees and charges for specified purposes. You are a Commonwealth body corporate established under, and governed by, legislation to promote and control the sale and export of certain products. As you were established as a body corporate for a public purpose and hold money on your own account you are a Commonwealth Authority. Therefore we consider that you are an Australian government agency and your fees satisfy the requirements for being Australian fees or charges. Australian fees or charges are not treated as the provision of consideration for a supply at first instance where they are of the nature described in subsections 81-10(4) or (5) of the GST Act. If a payment is not consideration for a supply, then the supply will not be a taxable supply under section 9-5 of the GST Act. Subsection 81-10(4) of the GST Act considers fees or charges paid for permissions etc. A payment is not the provision of consideration to the extent that the fee or charge relates to, or relates to an application for, the provision, retention, or amendment, under an Australian law, of a permission, exemption, authority or licence (however described). Your proposed single fee (incorporating application, renewal, continuing approval for export, export certificates and import certificates) is considered to be a fee that relates to the application, provision and retention of authorities necessary to export relevant products and is of a regulatory nature. Furthermore, none of the items in regulation 81-10.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 apply to specifically treat the fee as consideration. Therefore payment of this fee is not consideration for a supply, and so there is no taxable supply made by you in relation to these fees.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.