Private ruling: Council waste collection charges
Published: July 2012

Ruling: Q1: Are the waste collection charges in relation to mobile garbage bins (MGB) and mobile recycling bins (MRB) raised in the annual rate accounts exempt from goods and services tax (GST) from the relevant year? | A1: Yes

Relevant facts and circumstances: The Council is a local government entity and registered for GST. As required under the Local Government Act (LGA), Council acts to ensure the safety and welfare of the community. Council provides a waste management service to all ratepayers who own land that, · is not classed as vacant, and · is located in urban or specific rural areas. Council has authority to levy charges for the provision of waste management services under the LGA. Council imposes a 'waste collection charge' for a regular fortnightly collection service in relation to MGB and MRB. Ratepayers have an option to choose the size bins. The cost of the smaller bin is less than the cost of the larger MGB bin. There is no option in relation to the MRBs The waste collection charge is compulsory and applies irrespective of whether the MGB and/or MRB services are actually used. Waste Services Charges are listed in the A New Tax System (Goods and Services Tax) (Exempt taxes, fees and charges) Determination 2011 (No. 1) (Treasurers determination) as Australian taxes, fees and charges that are exempt from the GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 Division 81 | A New Tax System (Goods and Services Tax) Act 1999 Section 81-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 81-10 A New Tax System (Goods and Services Tax) (Exempt taxes, fees and charges) Determination 2011 (No. 1) | Tax Laws Amendment (2011 Measures No. 2) Act 2011 | A New Tax System (Goods and Services Tax) Regulations 1999 paragraph 81-15.01(1)(a) | A New Tax System (Goods and Services Tax) Regulations 1999 sub regulation 81-15.01(2) | A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No.2)

Reasons for decision: Summary: Prior to 1 July 2011, Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provided that GST applied to payments of taxes, fees and charges, except those excluded from GST by a written determination of the Treasurer. The Waste Services Charges relating to the regular collection of MGB and MRB were previously listed under the Treasurers determination as Australian taxes, fees and charges which were exempt from the GST. Those Australian taxes, fees and charges currently not subject to GST under the Treasurers determination will remain not subject to GST until 1 July 2013 and thereafter will be self-assessed. Division 81 of the GST Act was amended by the Tax Laws Amendment (2011 Measures No. 2) Act 2011 to allow government agencies to self assess the GST treatment of any Australian tax or any Australian fee or charge imposed under an Australian law and payable to the agency, in accordance with certain principles. From 1 July 2011, the GST law was amended to replace the Division 81 determination mechanism with specific legislative provisions to ensure that certain Australian taxes and government fees and charges are not subject to GST. The legislation also allows for the making of regulations to treat an Australian tax, or an Australian fee or charge, in a particular way. From 1 July 2011, the self-assessment approach has full effect in allowing entities to self assess the GST treatment of such payments. Relevantly, new subsection 81-10(1) of the GST Act states: 81-10 Effect of payment of certain fees and charges | Detailed Reasoning - Certain fees and charges 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 fee or charge that is of a kind covered by subsection (4) or (5). The kerbside collection of domestic waste is not a fee or charge of a kind covered by subsections (4) or (5) of section 81-10 of the GST Act. New section 81-15 of the GST Act states: | Detailed Reasoning - 81-15 Other fees and charges that do not constitute consideration: The regulations may provide that the payment of a prescribed *Australian fee or charge, or of an Australian fee or charge of a prescribed kind, or the discharging of a liability to make such a payment, is not the provision of *consideration. Amendments to the GST Regulations were promulgated with effect from 1 July 2012. New paragraph 81-15.01(1)(a) of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) relevantly states: | Detailed Reasoning - 81-15.01 Fees and charges which do not constitute consideration: (1) For section 81-15 of the Act, the following kinds of Australian fees and charges are prescribed: (a) a fee or charge for: (i) the kerbside collection of domestic waste; or (ii) the supply, exchange or removal of bins or crates used in connection with kerbside collection of domestic waste; By definition (sub regulation 81-15.01(2) of GST Regulations), domestic waste includes green and recyclable waste. Under the LGA , Council charges all relevant non-vacant properties a mandatory waste collection charge. This charge is compulsory and applies irrespective of whether the service (MGB and/or MRB) is actually used. Property owners have a choice of bins. Council imposes a higher mandatory annual charge in relation to the larger bin. As the charges for the mandatory waste management services are imposed under the LGA , the charges for the services are considered to satisfy the requirements of an Australian fee or charge for the purposes of section 81-15 of the GST Act. In accordance with Regulation 81-15.01 of the GST regulations, the charges for the mandatory waste management services do not constitute consideration for a supply. It follows that the charges for the kerbside collection of domestic waste is not consideration for a taxable supply pursuant to section 9-5 of the GST Act.

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