Private ruling: Goods and services tax (GST) and compensation and easements
Date of advice: 26 August 2015
Published: August 2015

Ruling: Q1: Is GST payable on the compensation you receive under the Compensation Agreement? | A1: No. | Q2: Is GST payable on the price entity X must pay for the easement? | A2: Yes. | Q3: Is GST payable on the payments made pursuant to the Option Agreement? | A3: Yes, except for a particular payment. | Q4: Is GST payable on the B compensation for the grant of the additional easement? | A4: Yes.

Relevant facts and circumstances: You are registered for GST. You carry on a farming business on a particular property Entity X will carry on certain activities on this land. In accordance with certain legislation, entity X is required to pay you compensation for damage caused by activities carried on by entity X on the land and entity X's development of the land. You own two parcels of land on which you carry on your farming business. One parcel of land will be the subject of a new easement which will benefit entity X. The other parcel of land is subject to an existing easement which benefits entity X. This is an easement appurtenant to the commercial facility (appurtenant easement), which was owned by another company at the time the easement was granted. Entity X acquired the commercial facility from that other company a number of years ago and consequently became the holder of the appurtenant easement on your land. In order for entity X to obtain a licence under the legislation, it is necessary for entity X to acquire an interest from the relevant landowners. The Minister cannot issue entity X with a licence unless the Minister is satisfied that entity X has acquired the necessary interests over private land affected by the proposed development. The acquisition of the interest may be done either by: a. agreement with the affected owners (in accordance with legislation); or b. with the Minister's consent, by compulsory acquisition (in accordance with legislation). The legislation provides that an easement which is purchased or acquired under the relevant legislative division is an easement in gross. Easements in gross are only available where provided for by statute. Generally speaking, companies in X's industry prefer to acquire easements (over other forms of land tenure) for a number of reasons, including that the easements confer durable rights to install and access the items which (particularly when registered) can be enforced despite changes of land ownership. It is not mandatory to register an easement. However, in order to afford entity X with the best legal protection possible in relation to its rights under the easement, it is imperative that easements are registered. The legislation does not contain mechanisms for registration of the easement. Therefore, the processes and requirements of the relevant property transfer legislation must be followed in order to effect registration. The property transfer legislation provides that a registered proprietor may transfer an interest in land by an instrument in an approved form. Under this legislation, upon registration of the transfer the interest as set out in the instrument will pass to the transferee. The approved form for a creation of easement under the property transfer legislation is (form name A). The approved form is the only means available to register easements in these circumstances. Under the legislation, a compulsory acquisition cannot proceed unless the Minister is satisfied that entity X has taken all reasonable steps to reach an agreement directly with the affected owners for acquisition of the necessary interests. Therefore, entity X is required by statute to attempt to reach an agreement with landowners to acquire an interest over their property. The proposed easements to be entered into with the landowners reflect the agreements entity X has reached with those landowners. Under the legislation, there is a statutory requirement for entity X to provide compensation to land owners, including you, whether an easement is acquired by way of direct agreement with you or by compulsory acquisition from you under the legislation. Consistent with the legislation, amounts of compensation are calculated with reference to certain damage caused by the existence of the easement. Under the legislation, owners and occupiers of land, such as you, are each entitled to compensation from entity X in respect of activities entity X carries on on the land, which cause damage. The legislation provides that the compensation may be determined by agreement directly between the parties. If the parties fail to reach an agreement, the amount can be determined by way of application to courts. Under the Compensation Agreement, entity X agrees to pay you compensation for damage caused by its activities on your land. You are currently in the process of negotiating some of the terms of the compensation agreements with entity X, but you and X have agreed in principle on the amounts of compensation under each of the Compensation Agreements. Generally speaking, under the Compensation Agreement, when Origin has properly completed its activities, you are required to provide an acknowledgment and waiver which states you waive any right which you might otherwise have now or would have in the future to claim that X has not performed its obligations under the Compensation Agreement and that you shall not make any such claim. Under the Option Agreement, you grant entity X an option to acquire an easement on one parcel of land, and the form of the easement is attached to the Option Agreement as Form A. Payments to you under the Option Agreement include an Option Fee and certain other payments, such as reimbursement of certain costs and a payment in respect of a damages claim. After entity X exercises the option under the Option Agreement, you are required to execute a Form A. Entity X is then required to make a payment to you under Form A being the consideration for the grant of the easement. The Option Agreement describes the timing of this payment under Form A and refers to the payment as name A. The Option Agreement states that the name A payment is a certain amount (which may be subject to specified changes including, for example, if the option is exercised more than X years after the date of the Option Agreement or if the actual location of the easement strip materially differs from the original location). Under Form A, you agree to grant entity X an easement in return for consideration set out in that contract. Name A is a separate amount to the amounts to be specified in the Compensation Agreement. The new easement is actively sought by entity X. It is not 'volunteered' by you - instead you were approached by entity X in the first instance. This is distinguishable from a 'commercial scenario' where a land owner actively seeks to make supplies or to participate in the arrangements (cf Hornsby Shire Council v Commissioner of Taxation [2008] AATA 1060). The negotiations for your grant of the new easement are part of a statutory framework in which entity X could have compulsorily acquired the easement if it could not reach a direct agreement with you. It is intended that: a) the compensation agreements between you and entity X will constitute agreements for the purposes of the legislation, and b) the Option Agreement and Form A will constitute agreements for the purposes of the legislation for the acquisition of an easement and for the compensation payable for such acquisition. In addition to the Compensation Agreements, X also seeks to acquire an additional easement for a strip of land that adjoins the existing appurtenant easement. X will pay you amount B as compensation for the acquisition of this easement. This B payment is a separate amount to the name A payment, as it is compensation for the grant of an additional easement.

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 Subsection 9-10(1). | A New Tax System (Goods and Services Tax) Act 1999 Subsection 9-10(2). | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 9-10(2)(d). | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 9-10(2)(e). | A New Tax System (Goods and Services Tax) Act 1999 Section 9-15 | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1

Reasons for decision: Summary: GST is not payable on the compensation paid under the Compensation Agreement because it is a payment in respect of a compensation claim for damages and is not consideration for any supply. | Detailed Reasoning - Detailed reasoning: GST is payable on taxable supplies. In accordance with section 9-5 of the A New Tax System (Goods and Services Tax) Act (GST Act), a supplier makes a taxable supply if: (a) the supplier makes the supply for consideration (b) the supply is made in the course or furtherance of an enterprise that the supplier carries on (c) the supply is connected with the indirect tax zone (Australia), and (d) the supplier is 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. The term 'supply' is defined in subsection 9-10(1) of the GST Act as 'any form of supply whatsoever'. 'Supply' includes: • a grant, assignment or surrender of real property (paragraph 9-10(2)(d) of the GST Act), and • a grant of a right (paragraph 9-10(2)(e) of the GST Act). Goods and Services Tax Ruling GSTR 2001/4 deals with the GST consequences of court orders and out of court settlements and discusses the meaning of 'supply for consideration'. Paragraph 7 of GSTR 2001/4 states: 7. This Ruling analyses the concept of supply and the nexus that must exist between payment and supply in order to establish the relationship of a 'supply for consideration'. As explained later in the ruling, a payment will not necessarily be consideration for a supply. Paragraph 22 of GSTR 2001/4 provides that a supply is essentially 'something which passes from one entity to another'. Further, paragraph 25 of GSTR 2001/4 states: Subsection 9-10(2) refers to two aspects of a supply; the thing which passes, such as goods, services, a right or obligation; and the means by which it passes, such as its provision, creation, grant, assignment, surrender or release. Therefore, the term 'supply' covers not only the subject of the transaction - the thing that passes - but also includes the action by which the thing passes from one entity to another. In addition, by use of the word 'make' in the phrase 'you make the supply' in paragraph 9-5(a) of the GST Act, there is a requirement for a supplier to take some action to cause a supply to be made. As such the landowners must take some positive action or do something for a supply to occur. Paragraphs 89 to 91 of GSTR 2001/4 discuss the concept of 'consideration' and the nexus test. They state: 89. Consideration 'for a supply or acquisition' is defined in section 195-1 as any consideration, within the meaning given by sections 9-15 and 9-17, which is 'in connection with the supply or acquisition 90. The Commissioner considers that, in the context of the GST Act, the expression 'you make the supply for consideration' in paragraph 9-5(a) means the same as 'there is consideration for the supply that you make'. 91. The references in the GST Act to 'supply for consideration' and more commonly to 'consideration for a supply' underscore the close coupling between the supply and the consideration that is necessary before a payment will be consideration for a supply that will make the supply subject to GST. Paragraphs 44 to 55 and 106, 107 and 109 of GSTR 2001/4 discuss the three categories of supply that may be made in relation to a court or out-of-court settlements. They state: 44. For the purposes of this Ruling, supplies that are related to an out-of-court settlement fall within the three categories of supply described below. This characterisation assists in the subsequent analysis of consideration for a supply, which commences at paragraph 100. The existence of a particular supply in relation to a given settlement will not necessarily mean a sufficient nexus exists between that supply and a payment made under the settlement. Earlier supply 45. Each and every supply is subject to GST provided the supply satisfies the requirements of a taxable supply. The GST Act does not prescribe any sequencing or hierarchy of supplies for taxing purposes. GST becomes payable on the relevant supply. 46. In these circumstances, where the subject of the dispute is an earlier transaction in which a supply was made involving the parties, that supply is referred to in this ruling as an 'earlier supply'. Example - Earlier supply 47. Widget Company supplies toys to a retailer. A dispute between the parties over payment for the toys is subsequently resolved through an out-of-court settlement, with the retailer paying all monies owed. The supply of the toys, that is the subject of the dispute, is an earlier supply because it occurred before the dispute arose. Current supply 48. A new supply may be created by the terms of the settlement. In this Ruling, such a supply is referred to as a 'current supply'. Example - Current supply 49. A dispute arises over a claim by Beaut Enterprises Pty Ltd that Plagiariser Pty Ltd is using their trade name . Negotiations between the parties follow , resulting in Beaut entering into an agreement with Plagiariser that allows Plagiariser to use its trade name in the future . This would constitute the supply of a right under the agreement between Beaut and Plagiariser that amounts to a ' current' supply . Supply related to discontinuance of action 50. Even where there is no earlier or current supply, the very wide range of things that can constitute a 'supply' means that one or more new supplies will probably crystallise on an out-of-court settlement being reached. 51. Generally (it is suggested in most if not all cases), the terms of a settlement, in finalising a dispute, will ensure no further legal action in relation to that dispute, provided that the terms of the settlement are complied with. This often takes the form of a plaintiff releasing a defendant from some (or all) of the existing claims and from further claims and obligations in relation to that dispute. 52. Sometimes, where a dispute involves counter claims, the terms of the settlement may provide for each party to release the other from such claims and obligations. 53. Where court proceedings have commenced, the filing of a notice of discontinuance pursuant to the relevant court rules may also be required to ensure the court is advised that a particular action will not proceed. 54. We consider that these conditions of settlement can create supplies for GST purposes. The supplies may be characterised as: (i) surrendering a right to pursue further legal action [paragraph 9-10(2)(e)]; or (ii) entering into an obligation to refrain from further legal action [paragraph 9-10(2)(g)]; or (iii) releasing another party from further obligations in relation to the dispute [paragraph 9-10(2)(g)]. 55. In this Ruling, we refer to supplies of these kinds as 'discontinuance supplies'. However, whether a discontinuance supply would be a taxable supply would then depend on the requirements of section 9-5 being met in relation to that supply. 106. Where the only supply in relation to an out-of-court settlement is a 'discontinuance' supply, it will typically be because the subject of the dispute is a damages claim. In such a case, the payment under the settlement would be in respect of that claim and not have a sufficient nexus with the discontinuance supply. 107. In most instances, a 'discontinuance' supply will not have a separately ascribed value and will merely be an inherent part of the legal machinery to add finality to a dispute which does not give rise to additional payment in its own right. They are in the nature of a term or condition of the settlement, rather than being the subject of the settlement. 109. We consider that a payment made under a settlement deed may have a nexus with a discontinuance supply only if there is overwhelming evidence that the claim which is the subject of the dispute is so lacking in substance that the payment could only have been made for the discontinuance supply. Paragraph 73 of GSTR 2001/4 discusses damages. It states: The most common form of remedy is a claim for damages arising out of the termination or breach of a contract or for some wrong or injury suffered. This damage, loss or injury, being the substance of the dispute, cannot in itself be characterised as a supply made by the aggrieved party. This is because the damage, loss or injury in itself does not constitute a supply under section 9-10 of the GST Act. Paragraphs 110 and 111 of GSTR 2001/4 further discuss damages. They state: 110. With a dispute over a damages claim, the subject of the dispute does not constitute a supply made by the aggrieved party… 111. If a payment is made under an out-of-court settlement to resolve a damages claim and there is no earlier or current supply, the payment will be treated as payment of the damages claim and will not be consideration for a supply at all, regardless of whether there is an identifiable discontinuance supply under the settlement. You and entity X will be parties to what is considered an out-of-court settlement under GST law. The damage suffered by you as a result of entity X's activities on your land is not a supply. The compensation under the Compensation Agreement is not consideration for an earlier or current supply. Additionally, the payment to the landowners under the Compensation Agreement is in respect of a compensation claim for any damages caused by the activities of entity X on the land. Hence, although you make a discontinuance supply to entity X, the compensation under the Compensation Agreement is not consideration for this supply. Therefore, the compensation under the Compensation Agreement is not consideration for a supply. Hence, the requirement of paragraph 9-5(a) of the GST Act is not met. As the requirements of section 9-5 of the GST Act are not met, you do not make a taxable supply in return for the compensation paid under the Compensation Agreement. Therefore, GST is not payable on the compensation payments made under the Compensation Agreement. | Summary: GST is payable on the name A payment because it is consideration for a taxable supply of real property. The requirements of section 9-5 of the GST Act are met. | Detailed Reasoning - Detailed reasoning: Paragraphs 81 to 91 of GSTR 2006/9 discuss compulsory acquisitions of real property. They state: | Detailed Reasoning - Vesting in the government authority: 81. An example of vesting is provided by section 20 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW), where the required acquisition notices are gazetted, the relevant land is: · 'vested in the authority of the State acquiring the land'; and · 'freed and discharged from all estates, interests, trust, restrictions, dedications, reservations, easements, rights, charges, rates and contracts in, over or in connection with the land'. The entity whose interest in the land is extinguished is compensated for the loss of that interest. That entity may agree to the compensation determined by the Valuer-General and execute a form of release. If the entity disputes the compensation amount, there is provision for payment of 90% of the initial valuation until the matter is resolved. 82. The effect of the gazettal notice is that the legal ownership of the land, described in the notice, is vested in the authority acquiring the land, and that the land becomes freed from any other interests. The entity's interest in the land, whether legal or equitable, is extinguished. When land vests in an authority in consequence of a gazettal notice, it is necessary to examine the relevant facts and circumstances to determine whether or not the owner makes a supply of the land to the authority. In cases where land vests in the authority as a result of the authority seeking to acquire the land, and initiating the compulsory acquisition process pursuant to its statutory right, then the owner does not make a supply because it takes no action to cause its legal interest to be transferred or surrendered to the authority. 82A. However, in other cases the owner may do something or undertake some action such that it does make a supply of the land that vests in the authority. For example, see the decision in Re Hornsby Shire Council v. Commissioner of Taxation in which the Administrative Appeals Tribunal found that, in the circumstances the owner, CSR Limited, made a supply of its land by way of entry into an obligation and the surrender of its land when it issued a notice, pursuant to statute, compelling the Hornsby Shire Council to acquire its land. 83. Some statutes provide that land remaining, where only part of the land (the 'target land') is to be compulsorily acquired, will also be compulsorily acquired if the owner and the acquiring authority agree that the remaining land will be of no practical use or value to the owner. In cases where, prior to the vesting of the target land, the owner and authority agree that the remaining land will also be acquired, and the remaining land is acquired contemporaneously with the target land, it is the Commissioner's view that the owner does not make a supply of the remaining land to the acquiring authority. Although the owner may have requested that the remaining land be acquired, the agreement reached between the parties, and the resulting acquisition of the remaining land is integral, ancillary or incidental to the compulsory acquisition of the target land. 83A. In contrast to the circumstances described in paragraph 83 of this Ruling, the land owner may, at a time subsequent to the authority's acquisition of the target land, request that the authority acquire the remaining land on the basis that it is of no practical use or value to the owner. Consistent with the decision in Re Hornsby Shire Council v. Commissioner of Taxation , in these circumstances it is the Commissioner's view that the owner has taken some action by requesting that the remaining land be acquired and makes a supply of the remaining land by way of surrender to the authority. In such cases, the acquisition of the remaining land is not integral, ancillary or incidental to the authority's compulsory acquisition of the target land. 84. Mere acceptance by an owner of an amount of compensation payable on the compulsory acquisition does not provide a sufficient nexus between the land which passes and the means by which it passes. The fact that the owner does not dispute the acquisition is not an activity that effects the supply of the land. Even if the owner agrees to the terms of the acquisition and the amount of compensation, the land is acquired by operation of the statute, upon publication of the acquisition notice, not by an action taken by the landowner. | Detailed Reasoning - Example 1: compulsory acquisition: 85. A government authority is compulsorily acquiring land and interests relating to that land, including the native title rights under a particular statute. The effect of compulsory acquisition is that every registered and unregistered interest in the land is extinguished, and each person who formerly held such an interest has that holding converted into a claim for compensation. 86. As required by the statute, the authority has made a public announcement that it is acquiring the land, and as a result, a number of groups of claimants have registered their respective native title over the land. 87. The authority has negotiated with each of the claimant groups as required by the statute, as to just compensation for the extinguishment of their rights over the land, and has entered into a deed with them. The deed sets out, among other things, that: · the claimants accept the compulsory acquisition and extinguishment of any and all native title rights and interests in the land and agree to withdraw a related objection made under the statute to compulsory acquisition; and · the authority undertakes to provide compensation to the native title claimants in the form of funding, land and certain services. 88. Although the claimants have agreed to accept the compulsory acquisition and the amount of the compensation, the agreement does not cause claimants' rights to be extinguished. These rights over the land are extinguished when all the limitations, reservations and restrictions over the land are revoked by the operation of the statute. The claimants are not making a supply of surrendering their rights. 89. It may be argued that the native title claimants are making a supply of entering into an obligation to withdraw any objections made under the relevant native title statute. However, no part of the compensation is consideration for a supply of withdrawing objections to the compulsory acquisition. The compensation relates to the loss suffered by the claimants on the extinguishment of their interest in the land. 90. In contrast, the extinguishment of an owner's interest by statute needs to be distinguished from the doing of a thing that is compelled by statute. Acquisition by agreement under a standard land contract 91. It may transpire that, before a compulsory acquisition under a statute is made, an owner and an authority enter into negotiations that result in the owner selling land under a standard land contract. The land in this case is not vested in the authority through the compulsory acquisition process. Instead, the interest in the land transfers as a result of settlement of the contract and execution of a transfer instrument. As such, the owner makes a supply of land to the authority. In accordance with paragraph 95 of Goods and Services Tax Ruling GSTR 2001/6, one needs to examine the character of the transaction that occurs and not what might have happened if it had been arranged differently (for example, entity X could have acquired an easement through compulsory acquisition if you did not enter into an agreement to grant an easement) for the purposes of identifying whether a payment is consideration for a supply. In accordance with paragraph 64 of Goods and Services Tax Ruling GSTR 2009/3, an amount can have both the character of damages, a penalty or compensation and also be consideration in connection with a supply. Although entity X would have compulsorily acquired an interest in your case if you did not enter into a contract to grant an easement, you will still make a supply to entity X in return for the price payable by entity X for the easement if entity X exercises its right to acquire the easement. In the Re Hornsby Shire Council v. Commissioner of Taxation case, the landowner took positive action to cause an interest to be acquired by another entity. Similarly, you will have taken some positive action to cause an easement to be created in favour of entity X by entering into the Option Agreement and the contract to grant the easement. You will have made a supply of real property. We do not consider the fact that entity X approached you to grant an easement to it means that you will not make a supply of a real property in relation to the easement The agreed consideration for your supply of the real property would include the name A payment. The consideration for this supply would also include any reimbursement you receive in respect of certain costs (as set out in the Option Agreement). There is a close coupling between the supply of the real property and these payments. Support for the view that you will supply the real property for consideration can be found in the court case, SXGX v. Commissioner of Taxation [2011] AATA 110. In that court case, a car dealer held land for use in his car dealing enterprise. He agreed to sell the land to the government. The land was expected to be compulsorily acquired if the car dealer did not sell it to the government. The judge held that the sale of the land to the government was a supply made for consideration, even though the land was expected to be compulsorily acquired had the car dealer not agreed to sell the land to the government. Therefore, if entity X exercises its option to acquire the easement, you will meet the requirement of paragraph 9-5(a) of the GST Act. In accordance with paragraph 64 of GSTR 2009/3, the fact that the price for the easement would have the character of compensation (as it would compensate for loss you suffer as a result of the easement) does not mean that it cannot be consideration for a supply. In accordance with issue 15.1.18 of the Property & Construction Industry Partnership - issues register: A transaction is a supply 'in the course or furtherance' of an enterprise that is carried where the supplies can be considered to be connected to the entity's enterprise. The term 'in the course or furtherance' is not defined in the GST Act, but the term is wide enough to cover any supply made in connection with an enterprise and to cover natural incidents and things incidental to the core enterprise activities. Also, an act done for the purpose or object of furthering an enterprise, or achieving its goals, is a furtherance of an enterprise although it may not always be in the course of that enterprise. Your supply of the real property is connected with your farming business and is incidental to your farming business because: • it is a supply of an interest in an asset of the farming business; • granting the easement will result in damage to your farming business and your farming business asset; and • granting the easement will entitle you to compensation for the associated damage to your farming business and your farming business asset. Therefore, you will supply real property to entity X in the course or furtherance of your farming enterprise. SXGX v. Commissioner of Taxation also s upports the view that you will supply the real property in the course or furtherance of the enterprise you carry on. The judge in that case held that the sale of the land to the government was a supply made in the course or furtherance of the car dealer's car dealing enterprise. As you will supply real property in the course or furtherance of your farming enterprise, you meet the requirement of paragraph 9-5(b) of the GST Act. You would also meet the requirements of paragraphs 9-5(c) and 9-5(d) of the GST Act. This is because: • the supply would be connected with Australia, and • you are registered for GST. There are no provisions of the GST Act under which your supply of the real property would be GST-free or input taxed. Therefore, if entity X exercises the option to acquire the easement, you will make a taxable supply to entity X in return for the name A payment because all of the requirements of section 9-5 of the GST Act would be met. Hence, you would have a GST liability on this payment. You would also have a GST liability on the reimbursement you receive in respect of certain costs (as set out in the Option Agreement). | Summary: GST is payable on the Option Fee because it is consideration for a taxable supply of an option. The requirements of section 9-5 of the GST Act are met. | Detailed Reasoning - Detailed reasoning: You have granted an option to acquire an easement. Therefore, you have supplied a real property right. The consideration for this supply includes the Option Fee. The consideration for the supply of the option also includes certain other payments set out in the Option Agreement, such as reimbursement of certain costs. A number of items are further consideration for the supply of the real property in return for the name A payment. You meet the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act in respect of your supply of the option. This is because: • you have supplied an option for consideration • you supplied the option in the course or furtherance of your farming enterprise • the supply is connected with Australia, and • you are registered for GST, and There are no provisions of the GST Act under which your supply of the option is GST-free or input taxed. Therefore, your supply of the option is a taxable supply as all of the requirements of section 9-5 of the GST Act are met. As explained above, your supply of the real property in return for the name A payment is also a taxable supply. Therefore, you have made taxable supplies to entity X in return for the Option Fee etc because all of the requirements of section 9-5 of the GST Act are met. Hence, you have a GST liability on the following payments made under the Option Agreement which are consideration for the supply of the option or the supply of the real property: (Deleted the list) You do not have a GST liability on the certain payment (if any) paid under the Option Agreement because this payment would be in respect of a damages claim and would not have a sufficient nexus with the supply of the option, real property or any other supply. | Detailed Reasoning - Question 4: GST is payable on the B compensation for the same reasons as why GST is payable on the name A payment. | Detailed Reasoning - Summary relating to entire arrangement: GST is payable on all of the payments except for: • compensation under the Compensation Agreement • a payment made pursuant to the Option Agreement in respect of a damages claim (if applicable).