Private ruling: GST and fees and charges
Date of advice: 22 March 2019
Published: May 2019

Ruling: Q1: Is payment of the fees treated as not being the provision of consideration under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, Division 81 does not apply to treat payment of the fees as not being the provision of consideration. Payment of the fees is consideration for a taxable supply under section 9-5 of the GST Act and the supplies to which payment relates are subject to GST.

Relevant facts and circumstances: You are a government agency in Australia. You have provided relevant information about your operations. You charge the relevant fees under the relevant Australian law.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 7-1 | 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 Subsection 81-10(1) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(2) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 81-10(4) | A New Tax System (Goods and Services Tax) Act 1999 Section 81-15 | A New Tax System (Goods and Services Tax) Act 1999 S ection 195-1 | A New Tax System (Goods and services tax) Regulations 1999 Regulation 81-10.01 | A New Tax System (Goods and services tax) Regulations 1999 Paragraph 81-10.01(1)(c) | A New Tax System (Goods and services tax) Regulations 1999 Paragraph 81-10.01(1)(g) | Income Tax Assessment Act 1997 Section 995-1

Reasons for decision: Summary: All legislative references in this ruling are to the A New Tax System (Goods and Services Tax) Act 1999 and the A New Tax System (Goods and services tax) Regulations 1999 , unless otherwise stated. Under section 7-1, GST is payable on taxable supplies. Under section 9-5, you make a taxable supply if: ● you make a supply for consideration ● the supply is made in the course or furtherance of an enterprise that you carry on ● 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. You are registered for GST. You make the supplies as the authorised Australian Government agency in the course or furtherance of an enterprise you carry on in relation to supplies connected with Australia as the indirect tax zone. Your supplies are neither GST-free or input taxed. However, one of the requirements for making a taxable supply under section 9-5 is that you make a supply for consideration. Special rules in Division 81 apply to the payment (or the discharging of the liability to make a payment) of Australian fees or charges, to an Australian government agency by an entity which is liable for the fee or charge under the provisions of the applicable Australian law. GST does not apply to the payments of fees or charges that are excluded from the GST to which Division 81 applies. They are treated as not being the provision of consideration and are not taxable. Australian fee or charge is defined in section 195-1 to mean a fee or charge (however described), other than an Australian tax, imposed under an Australian law and payable to an Australian government agency. Therefore, for the fees to not be consideration for a supply, they must be: (1) imposed under an Australian law (2) payable to an Australian government agency (3) covered by subsection 81-10(4) or of a kind prescribed by the GST Regulations. 1) Are the fees and charges imposed under an Australian law? Australian law is defined in sectio n 195-1 to have the meaning given by section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997). Section 995-1 of the ITAA 1997 provides an Australian law means a Commonwealth law, a State law or a Territory law. You provided the relevant legislation for which the fees are imposed. Therefore, they are fees and charges imposed under an Australian law. 2) Are the fees and charges payable to an ‘Australian government agency’? Australian government agency is defined in section 195-1 to have the meaning given by section 995-1 of the ITAA 1997. Australian government agency means: (a) the Commonwealth, a State or a Territory, or (b) an authority of the Commonwealth, a State or a Territory. The fees and charges are payable to you and you are a government agency in Australia. Therefore, for the purposes of this ruling, the fee are payable to an Australian government agency. 3) Are the fees and charges covered by subsection 81-10(4) or of a kind prescribed by the GST Regulations? Under subsection 81-10(1), a payment or discharging of a liability to make a payment, is not the provision of consideration if an Australian fee or charge is of a kind covered by subsection 81-10(4). Subsection 81-10(4) covers a fee or charge if it 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). However, subsection 81-10(2) provides a payment or a discharging of a liability to make a payment is treated as a provision of consideration to the extent the payment is an Australian fee or charge that is, or is of a kind, prescribed by the GST Regulations. To ascertain if the fees are not to be treated as consideration for the supply, we have to consider if subsection 81-10(2) applies by considering the relevant requirements and the regulations. Regulation 81-10.01 lists the prescribed kinds of Australian fees and charges that constitute consideration. Of relevance to this ruling is paragraph 81-10.01(1)(c), where it provides that a fee for hire, use of, or entry to a facility, except for an entry fee to a national park. In this regard, it is considered that the fees payable to you are covered by paragraph 81-10.01(1)(c). Further, also of relevance in your case is paragraph 81-10.01(1)(g) which prescribes a fee or charge for a supply of a non-regulatory nature as constituting consideration. The Explanatory Statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No. 2) provides the following explanation in relation to supplies that are not of a regulatory nature: This paragraph ensures that the non-regulatory activities of government are subject to GST. This paragraph applies to supplies of goods and services for which fees are imposed where the consumer is provided with something that lacks a regulatory character. That is, the fee or charge does not arise under an Australian law which is intended, for example, to regulate behaviour, ensure consumer protection and ensure compliance with certain standards. The paragraph applies even though it may be the sole responsibility of a government agency to supply the goods or services for which the fees are imposed, and such supplies are in the public interest. It is considered that a fee that is determined to be a fee for the hire, use of or entry to a facility would generally be commercial in nature. Does section 81-15 apply? Section 81-15 provides that the GST 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. There are no Australian fees or charges prescribed or of a prescribed kind that apply in your case. Conclusion: Therefore, as the fees are of a kind prescribed by the GST Regulations as constituting consideration for the purposes of subsection 81-10(2), they are consideration for a taxable supply as all of the requirements of section 9-5 are met.