Class Ruling CR 2015/67
Date of effect: 26 August 2015

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provision(s) 2. The relevant provisions dealt with in this Ruling are: Unless otherwise stated, all legislative references in this Ruling are to the GST Act. Class of entities 3. The class of entities to which this Ruling applies consists of all councils that are members of the Local Government Association of New South Wales (NSW) and the Shires Association of NSW. 4. Within this Ruling the class of entities is collectively referred to as Council. Qualifications 5. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 6. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 9 to 19 of this Ruling. 7. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then this Ruling:

Class of entities or scheme: 3. The class of entities to which this Ruling applies consists of all councils that are members of the Local Government Association of New South Wales (NSW) and the Shires Association of NSW. 4. Within this Ruling the class of entities is collectively referred to as Council. | Qualifications: 5. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 6. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 9 to 19 of this Ruling. 7. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then this Ruling: 8. This Ruling applies from the 26 August 2015 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. This ruling replaces CR 2013/19, which is withdrawn under section 358-20 of Schedule 1 to the Taxation Administration Act 1953 with a date of effect the same as the 26 August 2015. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). 9. The following description of the scheme is based on information provided by the applicant. 10. Council is registered for goods and services tax (GST). 11. By force of section 220 of the Local Government Act 1993 (NSW) (LG Act), Council is a body politic of the State of NSW with perpetual succession and the legal capacity and powers of an individual, both in and outside the State. 12. Council is empowered under the LG Act to: 13. Council levies charges for waste management services (WMS) under sections 496, 501 and 502 of the LG Act. [1] Additionally, under subsection 608(1) of the LG Act, Council may charge and recover a fee for any service it provides. 14. Under section 496 of the LG Act, Council must make and levy charges for domestic WMS. 15. The term 'domestic waste management services' is defined in the Dictionary in the LG Act as: 16. Under subsection 496(2), section 502 or subsection 608(1) of the LG Act, Council may levy charges for domestic WMS according to the actual use of the service. These situations include where: 17. Council may provide WMS for non domestic customers, for example, shops, factories and office buildings. In some areas the private sector is competing with Council for the provision of these services. Council charges for WMS to non domestic customers are made under either section 501, 502 or subsection 608(1) of the LG Act. 18. Once the ratepayer has requested a WMS and Council has decided to provide and charge for this service, then the ratepayer is liable to pay the charge under section 561 of the LG Act. Any debt is then subject to enforcement procedures by law. 19. Council may also provide other services in relation to waste. These are: 20. This Ruling addresses the GST treatment of the supply of WMS by Council on or after 1 July 2015. 21. Under section 81-15 and by virtue of regulation 81-15.01 of the GST Regulations, certain fees and charges are exempt [2] from GST. These include fees and charges for supplies of: 22. The following are examples of supplies of the kerbside collection of waste (domestic or non-domestic) that are exempt from GST due to paragraph 81-15.01(1)(a) of the GST Regulations: 23. An example of a supply that is exempt from GST because it is of a regulatory nature is where the respective fee or charge is for an application or renewal for listing on Council's approved list of private waste removal companies in relation to construction and demolition waste. 24. There are certain supplies to which Division 81 does not have an effect and therefore are not excluded from being for consideration by virtue of Division 81. These supplies need to be considered against the general rules in section 9-5 to determine if they are taxable. Examples of supplies of waste management services that are taxable supplies where the requirements of section 9-5 are satisfied are: Commissioner of Taxation 26 August 2015 25. Subsection 7-1(1) provides that GST is payable on taxable supplies. As such, Council is liable to pay the GST payable on any taxable supply it makes. Section 9-5 states: (* Asterisked terms are defined in the Dictionary in section 195-1). 26. As Council is registered for GST and provides WMS in carrying on its enterprise in Australia, the issue that arises under section 9-5 is whether such services are supplies for consideration. 27. Section 9-39 provides special rules in relation to making taxable supplies. In particular, item 8 in the table in section 9-39 provides that where there is a payment of taxes, fees and charges the special rules in Division 81 may apply. | Division 81: 28. Section 81-5 considers the effect of the payment of a tax. It states: 29. The term 'Australian tax' is defined in section 195-1 as: 30. 'Tax' is not defined in the GST Act. However, the following is the usual description of a tax, as cited in the High Court case of Roy Morgan Research Pty Ltd v. Federal Commissioner of Taxation (2011) 244 CLR 97, as per Latham CJ in Matthews v. Chicory Marketing Board (Victoria) (1938) 60 CLR 263. 31. The above description includes the words 'not a payment for services rendered'. It was discussed in Air Caledonie International v. Commonwealth (1988) 165 CLR 462 that in order to be classified as a fee for service rather than a tax, the fee or charge must be exacted for particular identified services provided or rendered individually to, or at the request or direction of, the particular person required to make the payment. 32. The relevant sections of the LGA, namely sections 496, 501, 502 and subsection 608(1) use the words 'levying', 'charges', 'services', 'service to that land' and 'fee' in relation to WMS. A payment to Council of a charge for a WMS is for an identified service provided. For this reason, we do not consider a payment, or the discharging of a liability to make payment, for a WMS to be a tax. 33. In contrast, a payment of ordinary rates satisfies the definition of a 'tax' as it is not for services rendered to the ratepayer. The activities of council of maintaining roads and parks, and the infrastructure of the council area are of benefit to anyone living in or visiting the council area, i.e. to the world at large. | Fees and Charges: 34. Sections 81-10 and 81-15 consider the effect of certain fees and charges and state: 35. The term 'Australian fee or charge' is defined in section 195-1 as: 36. The term 'Australian law' is defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) and relevantly includes a State law. It includes acts and law making powers which are delegated by parliaments, such as regulations, by-laws, proclamations and orders made under Acts. Therefore, the LG Act is an Australian law. 37. The term 'Australian government agency' is defined in section 995-1 of the ITAA 1997 and means: 38. For the purposes of this Ruling it is accepted that Council comes within the definition of Australian government agency. | Fees and charges that constitute consideration: 39. Where a fee or charge does not constitute consideration because of subsection 81-10(1) as a result of being a fee or charge covered by subsections 81-10(4) or (5), the operation of subsection 81-10(2) will make a fee or charge constitute consideration if it is prescribed by regulation 81-10.01 of the GST Regulations. Paragraph 81-10.01(1)(d) of the GST Regulations prescribes that a fee for the use of a waste disposal facility is consideration. | Fees and charges that do not constitute consideration: 40. Where a fee or charge is not exempt as a result of the application of subsection 81-10(1) it still may be exempt if it is prescribed under regulation 81-15.01 of the GST Regulations which sets out those fees and charges that are prescribed for section 81-15 and which do not constitute consideration. One of these is the kerbside collection of waste or the supply, exchange or removal of bins or crates used in connection with kerbside collection of waste. Waste includes green waste and recyclables. 41. The ES states the following in relation to fees and charges for the kerbside collection of waste: 42. Another fee or charge that is prescribed for section 81-15 by virtue of regulation 81-15.01 of the GST Regulations is a fee or charge for a supply of a regulatory nature made by an Australian government agency. | Fees and charges covered by both regulations 81-10.01 and 81-15.01 of the GST Regulations: 43. If a fee or charge is covered by both regulations 81-10.01 and 81-15.01 of the GST Regulations, regulation 81-15.02 of the GST Regulations determines which regulation would prevail. However, for regulation 81-10.01 to apply the fee or charge must first be covered by subsections 81-10(4) or (5). Fees and charges such as the kerbside collection of waste or for the supply exchange or removal of bins or crates used in the connection with the kerbside collection of waste, where they can also be made by private suppliers, are not covered by regulation 81-10.01 as they are not covered by subsections 81-10(4) or (5). 44. Sections 496, 501, 502, 560 and subsection 608(1) of the LG Act state: 45. The following is a detailed contents list for this Ruling: © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Ruling: 20. This Ruling addresses the GST treatment of the supply of WMS by Council on or after 1 July 2015. 21. Under section 81-15 and by virtue of regulation 81-15.01 of the GST Regulations, certain fees and charges are exempt [2] from GST. These include fees and charges for supplies of: 22. The following are examples of supplies of the kerbside collection of waste (domestic or non-domestic) that are exempt from GST due to paragraph 81-15.01(1)(a) of the GST Regulations: 23. An example of a supply that is exempt from GST because it is of a regulatory nature is where the respective fee or charge is for an application or renewal for listing on Council's approved list of private waste removal companies in relation to construction and demolition waste. 24. There are certain supplies to which Division 81 does not have an effect and therefore are not excluded from being for consideration by virtue of Division 81. These supplies need to be considered against the general rules in section 9-5 to determine if they are taxable. Examples of supplies of waste management services that are taxable supplies where the requirements of section 9-5 are satisfied are: Commissioner of Taxation 26 August 2015


Appendix: 25. Subsection 7-1(1) provides that GST is payable on taxable supplies. As such, Council is liable to pay the GST payable on any taxable supply it makes. Section 9-5 states: (* Asterisked terms are defined in the Dictionary in section 195-1). 26. As Council is registered for GST and provides WMS in carrying on its enterprise in Australia, the issue that arises under section 9-5 is whether such services are supplies for consideration. 27. Section 9-39 provides special rules in relation to making taxable supplies. In particular, item 8 in the table in section 9-39 provides that where there is a payment of taxes, fees and charges the special rules in Division 81 may apply. | Division 81: 28. Section 81-5 considers the effect of the payment of a tax. It states: 29. The term 'Australian tax' is defined in section 195-1 as: 30. 'Tax' is not defined in the GST Act. However, the following is the usual description of a tax, as cited in the High Court case of Roy Morgan Research Pty Ltd v. Federal Commissioner of Taxation (2011) 244 CLR 97, as per Latham CJ in Matthews v. Chicory Marketing Board (Victoria) (1938) 60 CLR 263. 31. The above description includes the words 'not a payment for services rendered'. It was discussed in Air Caledonie International v. Commonwealth (1988) 165 CLR 462 that in order to be classified as a fee for service rather than a tax, the fee or charge must be exacted for particular identified services provided or rendered individually to, or at the request or direction of, the particular person required to make the payment. 32. The relevant sections of the LGA, namely sections 496, 501, 502 and subsection 608(1) use the words 'levying', 'charges', 'services', 'service to that land' and 'fee' in relation to WMS. A payment to Council of a charge for a WMS is for an identified service provided. For this reason, we do not consider a payment, or the discharging of a liability to make payment, for a WMS to be a tax. 33. In contrast, a payment of ordinary rates satisfies the definition of a 'tax' as it is not for services rendered to the ratepayer. The activities of council of maintaining roads and parks, and the infrastructure of the council area are of benefit to anyone living in or visiting the council area, i.e. to the world at large. | Fees and Charges: 34. Sections 81-10 and 81-15 consider the effect of certain fees and charges and state: 35. The term 'Australian fee or charge' is defined in section 195-1 as: 36. The term 'Australian law' is defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) and relevantly includes a State law. It includes acts and law making powers which are delegated by parliaments, such as regulations, by-laws, proclamations and orders made under Acts. Therefore, the LG Act is an Australian law. 37. The term 'Australian government agency' is defined in section 995-1 of the ITAA 1997 and means: 38. For the purposes of this Ruling it is accepted that Council comes within the definition of Australian government agency. | Fees and charges that constitute consideration: 39. Where a fee or charge does not constitute consideration because of subsection 81-10(1) as a result of being a fee or charge covered by subsections 81-10(4) or (5), the operation of subsection 81-10(2) will make a fee or charge constitute consideration if it is prescribed by regulation 81-10.01 of the GST Regulations. Paragraph 81-10.01(1)(d) of the GST Regulations prescribes that a fee for the use of a waste disposal facility is consideration. | Fees and charges that do not constitute consideration: 40. Where a fee or charge is not exempt as a result of the application of subsection 81-10(1) it still may be exempt if it is prescribed under regulation 81-15.01 of the GST Regulations which sets out those fees and charges that are prescribed for section 81-15 and which do not constitute consideration. One of these is the kerbside collection of waste or the supply, exchange or removal of bins or crates used in connection with kerbside collection of waste. Waste includes green waste and recyclables. 41. The ES states the following in relation to fees and charges for the kerbside collection of waste: 42. Another fee or charge that is prescribed for section 81-15 by virtue of regulation 81-15.01 of the GST Regulations is a fee or charge for a supply of a regulatory nature made by an Australian government agency. | Fees and charges covered by both regulations 81-10.01 and 81-15.01 of the GST Regulations: 43. If a fee or charge is covered by both regulations 81-10.01 and 81-15.01 of the GST Regulations, regulation 81-15.02 of the GST Regulations determines which regulation would prevail. However, for regulation 81-10.01 to apply the fee or charge must first be covered by subsections 81-10(4) or (5). Fees and charges such as the kerbside collection of waste or for the supply exchange or removal of bins or crates used in the connection with the kerbside collection of waste, where they can also be made by private suppliers, are not covered by regulation 81-10.01 as they are not covered by subsections 81-10(4) or (5).


Goods and services tax: GST treatment of waste management services supplied by NSW councils: Paragraph 32 of TR 2006/10 provides further guidance on the status and binding effect of public rulings where the law has been repealed and rewritten. | A comparison table which provides the replacement provisions in the A New Tax System (Goods and Services Tax) Regulations 2019 for regulations which are referenced in this Ruling is available. | What this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | 'domestic waste management services' means services comprising the periodic collection of domestic waste from individual parcels of rateable land and services that are associated with those services. | However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. | 81-5 Effect of payment of tax | Australian tax means a tax (however described) imposed under an *Australian law. | .....a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered ... | 81-10 Effect of payment of certain fees and charges | 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. | 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. | Fees and charges for kerbside collection of waste | Item [4] - paragraph 81-15.01(1)(a) and subregulation 81-15.01(2) | This paragraph and subregulation ensure that fees and charges for the kerbside collection of waste are not treated as the provision of consideration, and therefore do not give rise to a taxable supply under Division 81. | Kerbside waste collection fees are often, but not always, covered by general council rates. It is intended that all fees and charges for kerbside collection of waste are not consideration for a supply, so that these services are exempt from GST. This is regardless of whether the fees paid in relation to the service are compulsory or optional as kerbside collection of waste is a basic activity of local government. | Kerbside collection includes a regular waste collection service conducted by an Australian government agency where, for practical reasons, the waste must be collected from inside the property boundary of the ratepayer, such as a waste service for residents of a high-rise residential complex. However, additional waste collection undertaken by a commercial entity is not considered to be kerbside collection even though it may be collected from the kerbside in some circumstances. | 502 Charges for actual use | A council may make a charge for a service referred to in section 496 or 501 according to the actual use of the service. | 561 Who is liable to pay charges? | Appendix 2 - Legislative references | Appendix 3 - Detailed contents list | Legislative References: ANTS(GST)A99 ANTS(GST)A99 7-1(1) ANTS(GST)A99 9-5 ANTS(GST)A99 9-39 ANTS(GST)A99 Div 81 ANTS(GST)A99 81-5 ANTS(GST)A99 81-10 ANTS(GST)A99 81-10(1) ANTS(GST)A99 81-10(2) ANTS(GST)A99 81-10(4) ANTS(GST)A99 81-10(5) ANTS(GST)A99 81-15 ANTS(GST)A99 195-1 ANTS(GST)R99 Div 81 ANTS(GST)R99 81-10.01 ANTS(GST)R99 81-10.01(1)(d) ANTS(GST)R99 81-15.01 ANTS(GST)R99 81-15.01(1)(a) ANTS(GST)R99 81-15.01(2) ANTS(GST)R99 81-15.02 ITAA 1997 995-1 LG(NSW)A93 LG(NSW)A93 220 LG(NSW)A93 496 LG(NSW)A93 496(2) LG(NSW)A93 501 LG(NSW)A93 502 LG(NSW)A93 560 LG(NSW)A93 608(1) TAA 1953 TAA 1953 Sch 1 358-20


Related rulings: TR 2006/10 CR 2013/19
Legislative references: 44. Sections 496, 501, 502, 560 and subsection 608(1) of the LG Act state: | 45. The following is a detailed contents list for this Ruling: | © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA | You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). | Not previously issued as a draft
Case references: Roy Morgan Research Pty Ltd v. Federal Commissioner of Taxation [2011] HCA 35 (2011) 244 CLR 97 2011 ATC 20-282 (2011) 80 ATR 1
Subject references: Division 81 - Payment of taxes, fees and charges Goods and services tax Government entities Government related entities GST consideration GST regulations Local government