Private ruling: GST and consideration for taxable supplies
Date of advice: 27 March 2026
Published: 29 June 2026
Ruling period: XX/XX/20XX to XX/XX/20XX
Date scheme commenced: XX/XX/20XX

Ruling: Q1: Are you invoices to company-owned entities within your operational group for employment costs taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. You are not making taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). | Q2: If the answer to Question 1 is 'no', can you amend prior activity statements to correct incorrectly reported GST amounts? | A2: No. As you have passed on excess GST to other company-owned entities within your operational group, the excess GST is taken to have always been payable and is not refundable unless and until the recipients are reimbursed.

Relevant facts and circumstances: You hold an Australian Business Number and are registered for GST. Your group operates a combination of franchised and company-owned entities across Australia. You are the legal employing entity for employees engaged across all company-owned entities within your operational group. Company-owned entities are responsible for individual workforce management and employee reporting. You calculate the total employment costs for each payroll cycle. You invoice company-owned entities within your operational group to recover employment costs incurred. You do not charge a fee for processing payroll accounts. You have treated these supplies as taxable, and GST has been added at time of invoicing.

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 section 9-10 | A New Tax System (Goods and Services Tax) Act 1999 section 9-15 | A New Tax System (Goods and Services Tax) Act 1999 section 19-10 | A New Tax System (Goods and Services Tax) Act 1999 section 142-5 | A New Tax System (Goods and Services Tax) Act 1999 section 142-10 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision: Summary: You are not making a supply when you invoice company-owned entities within your group, and the payments received are not consideration for a taxable supply under section 9-5 of the GST Act. | Detailed Reasoning - Detailed reasoning: Section 9-5 A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that 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 the indirect tax zone; 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. The term 'supply' is defined under subsection 9-10(1) of the GST Act in very wide terms as being any form of supply whatsoever. Without limiting subsection 9-10(1) of the GST Act, subsection (2) provides that a supply includes, among other things, an entry into, or release from, an obligation to do anything. Section 195-1 of the GST Act provides that 'consideration', for a supply or acquisition, means any consideration, within the meaning given by sections 9-15 and 9-17 of the GST Act, in connection with the supply or acquisition. Subsection section 9-15(1) of the GST Act provides that consideration includes, among other things, any payment, or act or forbearance, in connection with a supply of anything. Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9) examines the meaning of 'supply' as required by the GST Act and sets out propositions that are relevant in analysing whether a supply has been made in a particular arrangement. The propositions discussed in GSTR 2006/9 are not universal and may be qualified or excepted by provisions of the GST Act and must be applied having regard to the facts and circumstances of the transaction and the totality of the arrangement. Relevant to the circumstances of this arrangement, the general propositions considered when analysing whether a supply has been made include that: Further, GSTR 2006/9 discusses the requirement for a close coupling between supply and consideration under the GST Act. Paragraph 180 explains that, in determining whether a payment is consideration under section 9-15 of the GST Act, and whether there is a supply for consideration, it is necessary to consider whether there is a sufficient nexus between the payment and a supply. This involves an objective assessment of the true character of the transaction, having regard to all of the arrangements entered into and the circumstances in which they are made, rather than the description the parties give to the arrangement. You received payment for amounts equivalent to employment costs incurred by company-entities owned within your operating group. You provided a service to process payroll payments on behalf of other company-owned entities. However, there is no sufficient nexus between the service provided and the payment received, as the true character of the payment is mere payment of costs incurred by other entities owned within your group. Accordingly, there is no taxable supply being made as the payments received by the service do not constitute consideration for a taxable supply under section 9-5 of the GST Act. | Detailed Reasoning - Question 2: If the answer to Question 1 is 'no', can you amend prior activity statements to correct incorrectly reported GST amounts? | Summary: As you have passed on GST incorrectly included in prior activity statements to company-owned entities within your operational group, Division 142 of the GST Act applies. Accordingly, the excess GST is taken to have always been payable and is not refundable unless and until the recipients are reimbursed. | Detailed Reasoning - Detailed reasoning: Division 142 generally restricts refunds when you make an overpayment of GST, where a refund may result in a windfall gain. Excess GST is defined in subsection 142-5(1) as an amount that has been taken into account in an assessed net amount but in fact is not payable. Under section 142-10, if the excess GST has been passed on to another entity, that excess GST is taken to have always been payable until the passed-on GST is reimbursed to the other entity. Where excess GST has not been passed on, section 142-10 does not apply. In that case, the supplier may request an amendment to its assessment for the relevant tax period to reduce the amount of GST attributable to that period. Any resulting refund is then paid or applied in accordance with Division 3 and 3A of Part IIB of the Taxation Administration Act 1953 (TAA). Goods and Services Tax Ruling 2015/1 Goods and services tax: meaning of the terms 'passed on' and 'reimburse' for the purposes of Division 142 of the A New Tax System (Goods and Services Tax) Act 1999 (GSTR 2015/1) notes that whether the excess GST has been passed on is a question of fact to be determined having regard to the particular circumstances of each case. Paragraph 12 of GSTR 2015/1 explains that excess GST is the amount included in an entity's assessed net amount that exceeds what was actually payable for the relevant tax period before Division 142 is applied. Paragraph 24 of GSTR 2015/1 explains that the GST Act contemplates that GST may be passed on by the supplier to the recipient. Paragraph 25 further explains that where excess GST is included on a tax invoice, this is prima facie evidence that the GST has been passed on. Paragraph 26 acknowledges that, although there is a general expectation that excess GST will have been passed on in ordinary circumstances, the facts of a particular case may indicate otherwise. Paragraph 28 of GSTR 2015/1 identifies a number of factors relevant to determining whether excess GST has been passed on to recipients, including: The question of passing on is one of fact rather than fairness. While fairness may be relevant to the exercise of the Commissioner's discretion under subsection 142-15(1) of the GST Act, it is not relevant to determining whether excess GST has been passed on. The manner in which the excess GST arose The manner in which an amount of excess GST arises is relevant in considering whether or not the excess GST was passed on. GSTR 2015/1 at paragraph 31 considers four common circumstances: Paragraphs 32 and 33 of GSTR 2015/1 distinguish between errors made after the transaction has occurred and errors made before the price is set. Errors arising after the transaction may indicate that excess GST has not been passed on, whereas errors made before the price is set will generally be reflected in the amount charged to the recipient and are more likely to indicate that the excess GST has been passed on. In your circumstances, you incorrectly treated invoices to company-owned retail store entities for costs incurred as taxable supplies. The suppliers pricing policy Paragraph 40 of GSTR 2015/1 states the supplier's pricing policy and practice involves considering your conduct and knowledge at the relevant time of setting the price of a supply and whether there have been any changes in the price to account for GST. Paragraphs 41-42 and 45-46 of GSTR 2015/1 explain that a supplier's pricing policy may indicate that excess GST has been passed on where the supplier set its price on the basis that GST applied. They also explain that a mere assertion that GST was not considered when setting price is not sufficient, by itself, to establish that the excess GST was not passed on. You considered GST when setting the price of the invoices, as these invoices were for the direct employment costs with GST added to this amount. The documentary evidence The documentary evidence is a further relevant factor. You advised that tax invoices were issued showing the GST component. Those invoices were used as evidence of creditable acquisitions for their GST assessments. This documentary evidence supports a finding that the excess GST has been passed on. On the facts provided, you took into account amounts of GST in assessed net amounts for each of the quarterly tax periods in the relevant period that exceeded the amounts of GST payable, as a result of incorrectly treating employment costs incurred as taxable supplies. To that extent, the amounts of GST incorrectly included in the assessed net amounts constitute excess GST for the purposes of subsection 142-5(1) of the GST Act. Accordingly, as there is excess GST and that excess GST has been passed on, section 142-10 of the GST Act applies such that the excess GST is treated as having always been payable on a taxable supply unless and until the relevant recipient is reimbursed for the amount passed on.

for every supply there is a supplier (Proposition 1); | for every supply there is generally a recipient and a corresponding acquisition (Proposition 2); and | an entity makes a supply where it provides something to another entity (Proposition 5). | the documentary evidence surrounding the overpayment, and | any other relevant circumstances | incorrectly treating something which is not a supply as a taxable supply | miscalculating a GST liability under the GST law | incorrectly reporting an amount of GST on a GST return, and | incorrectly treating a GST-free or input taxed supply as a taxable supply (including incorrectly apportioning the taxable and non-taxable components of a mixed supply).