Private ruling: GST and supply of goods by a government agency
Published: May 2013

Ruling: Q1: Is the supply of goods exempt from goods and services tax (GST) under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) from 1 July 2013? | A1: Yes, the supply of goods is exempt from GST under Division 81 of the GST Act from 1 July 2013.

Relevant facts and circumstances: The entity, a government agency, is responsible for the administration and provision of specific goods.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Division 81 | A New Tax System (Goods and Services Tax) Act 1999 section 81-10 | A New Tax System (Goods and Services Tax) Act 1999 section 81-15 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1 | A New Tax System (Goods and Services Tax) Regulations 1999 regulation 81-15.01 | A New Tax System (Goods and Services Tax) Regulations 1999 paragraph 81-15.01(1)(f) | A New Tax System (Goods and Services Tax) Regulations 1999 regulation 81-10.01 | Income Tax Assessment Act 1997 section 995-1

Reasons for decision: Summary: Division 81 of the GST Act was amended with effect from 1 July 2011 to allow entities to self assess the GST treatment of a payment of an Australian tax or an Australian fee or charge in accordance with certain principles. Prior to 1 July 2011, Division 81 of the GST Act provided that GST applied to payments of taxes, fees and charges, except for those taxes, fees and charges that were excluded from GST by a written determination of the Treasurer. Under the transitional arrangements, those Australian taxes, fees and charges that are not subject to GST because they are listed in the A New Tax System (Goods and Services Tax)(Exempt Taxes, Fees and Charges) Determination 1011 (No.1) (the Treasurer's Determination), remain not subject to GST until 30 June 2013. From 1 July 2013, they will be assessed under Division 81 of the GST Act as amended. The GST treatment of all Australian taxes, fees and charges that are not listed in the Treasurer's Determination are self assessed under the amended Division 81 of the GST Act with effect from 1 July 2011. From 1 July 2013, fees paid for the goods supplied by the government agency will be assessed under Division 81 of the GST Act as amended. Sections 81-10 and 81-15 of the GST Act consider the effect of the payment of certain fees and charges and state: | Detailed Reasoning - 81-10 Effect of payment of certain fees and charges: 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). Prescribed fees and charges treated as consideration (2) However, a payment you make, or a discharging of your liability to make a payment, is treated as the provision of *consideration to the extent the payment is an *Australian fee or charge that is, or is of a kind, prescribed by the regulations. (3) For the purposes of subsection (2), the *consideration is taken to be provided to the entity to which the fee or charge is payable, for a supply that the entity makes to you. Fees or charges paid for permissions etc. (4) This subsection covers a fee or charge if the fee or charge: a. relates to; or b. relates to an application for; the provision, retention, or amendment, under an *Australian law, of a permission, exemption, authority or licence (however described). Fees or charges relating to information and record-keeping etc. (5) This subsection covers a fee or charge paid to an *Australian government agency if the fee or charge relates to the agency doing any of the following: a. recording information; b. copying information; c. modifying information; d. allowing access to information; e. receiving information; f. processing information; g. searching for information. | 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. (*items are defined in section 195-1 of the GST Act) Australian fee or charge Section 195-1 of the GST Act defines 'Australian fee or charge' as: Australian fee or charge means a fee or charge (however described), other than an *Australian tax, imposed under an *Australian law and payable to an *Australian government agency. Australian law The term 'Australian law' is defined in section 195-1 of the GST Act as having the meaning given by section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) which states: Australian law means a * Commonwealth law, a * State law or a * Territory law. An Australian law includes Acts and law making powers which are delegated by parliaments such as regulations, by-laws, proclamations and orders made under Acts. Australian government agency Section 195-1 of the GST Act defines the term 'Australian government agency' as having the meaning given by section 995-1 of the ITAA 1997 which states: Australian government agency means: (a) the Commonwealth, a State or a Territory; or (b) an authority of the Commonwealth or of a State or a Territory. The entity comes within the definition of an Australian government agency for the purposes of Division 81 of the GST Act. GST Regulations Regulation 81-15.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) sets out those fees and charges that are prescribed for section 81-15 of the GST Act and which do not constitute consideration. Paragraph 81-15.01(1)(f) of the GST Regulations refers to 'a fee or charge for a supply of a regulatory nature made by an Australian government agency'. The term 'regulatory nature' is not defined in the GST Regulations or the GST Act. The Explanatory Statement (ES) to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No.2) states: The term 'regulatory' captures those supplies made by a government agency, where that agency is legislatively empowered to make the relevant supply and the supply is to satisfy a regulatory purpose. In some instances, although the consumer acquires something that may be of intrinsic value to the consumer, the acquisition is made in the context of satisfying a regulatory requirement of an Australian law… Regulation 81-10.01 of the GST Regulations sets out those fees and charges that are prescribed for subsection 81-10(2) of the GST Act and which are treated as consideration. Fees charged for these goods are not treated as consideration under regulation 81-10.01 of the GST Regulations. Therefore, it is considered that the fees paid for these goods are for a supply of a regulatory nature. In this case, the supply of the goods is made by an Australian government agency and the supply is of a regulatory nature. As such, the supply is exempt from GST by virtue of section 81-15 of the GST Act. Therefore, the supply of the goods is exempt from GST under Division 81 of the GST Act from 1 July 2013.