GST and Legal Document Serving

Is the entity, a commercial legal document server, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides a legal document serving service to clients?

Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it provides a legal document serving service to clients.

The entity is a commercial legal document server. In return for payment, the entity serves documents for clients in relation to court proceedings. The entity performs this service, generally, where there is a requirement by the particular court that papers be served on the other party by a professional document server. The fee that the entity receives is for the supply of its services; it is not a fee imposed under any Australian law.

The entity supplies this service in the course of its enterprise, the supply is connected with Australia and the entity is registered for goods and services tax (GST).

Section 9-5 of the GST Act sets out the requirements that must be met for a supply to be a taxable supply. One of those requirements is that the supply must be made for consideration (paragraph 9-5(a) of the GST Act).

Under paragraph 9-15(1)(b) of the GST Act, any payment for the supply of anything is consideration. The entity is receiving a payment for the supply of their services. Ordinarily, this would constitute consideration under paragraph 9-15(1)(b) of the GST Act.

However, section 9-39 of the GST Act provides that Division 81 of the GST Act sets out special rules relating to payments of taxes, fees and charges.

Subsection 81-5(2) of the GST Act provides that the payment of any Australian tax, fee or charge that is specified in a written determination of the Treasurer is not the provision of consideration.

An Australian tax, fee or charge, as per section 195-1 of the GST Act, is: (a) a tax imposed under an Australian law; or (b) a fee or charge imposed under an Australian law and payable to an Australian government agency.

The fee that is payable to the entity is not a tax imposed under an Australian law, nor is it a fee or charge imposed under an Australian law that is payable to an Australian government agency. Rather, the fee is a payment to the entity in return for its services. As such, subsection 81-5(2) of the GST Act does not apply and the payment that the entity receives is consideration as per paragraph 9-15(1)(a) of the GST Act.

As the payment made to the entity is consideration for the supply of its services, paragraph 9-5(a) of the GST Act is satisfied.

The remaining requirements for a supply to be taxable under section 9-5 of the GST Act are: • the supply must be in the course or furtherance of an enterprise carried on by the entity; and • the supply must be connected with Australia; and • the entity must be registered or required to be registered for GST.

However, the supply is not taxable if it is GST-free or input taxed.

The supply of the entity's services is made in the course of its enterprise, the supply is connected with Australia, and the entity is registered for GST. As such, all of the positive limbs of section 9-5 of the GST Act are satisfied. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies legal document serving services. [Note: Where the fee or charge is payable to an Australian government agency, and the fee or charge is listed in the A New Tax System (Goods and Services Tax)(Exempt Taxes, Fees and Charges) Determination 2001 (No. 4), the payment of the fee or charge is not the provision of consideration. The result is that section 9-5 of the GST Act is not met, and no taxable supply is made].