Issue
Do the entities, participants in a joint venture, meet the requirements for approval as participants in a GST joint venture under subsection 51-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), where the purpose of the joint venture is to operate passenger bus services?
Decision
No, the entities do not meet the requirements for approval as participants in a GST joint venture under subsection 51-5(1) of the GST Act where the purpose of the joint venture is to operate passenger bus services.
Facts
The entities are two companies that are individually registered for goods and services tax (GST). The entities have entered into a joint venture arrangement to operate passenger bus services. The entities have jointly applied, in the approved form, for approval of the joint venture as a GST joint venture.
Reasons for Decision
Subsection 51-5(1) of the GST Act sets out the requirements that need to be satisfied for the Commissioner to approve 2 or more entities as participants in a GST joint venture.
Paragraph 51-5(1)(a) of the GST Act provides that the joint venture must be for the exploration or exploitation of mineral deposits, or for a purpose specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).
As the purpose of the joint venture is not for the exploration or exploitation of mineral deposits, it is necessary to determine whether the operation of passenger bus services is a purpose specified in the GST Regulations.
Subregulation 51-5.01(1) of the GST Regulations lists the various activities that are specified purposes for a GST joint venture. These activities are: • research and development; • the provision of insurance, other than life insurance; • fishing; • agriculture; • cultivation, or exploitation, of timber; • design, or building, or maintenance, of residential or commercial premises; • civil engineering, including the design, construction and maintenance of roads, railways, bridges, canals, dams, ports, harbours, airports and similar installations; • generation, or transmission, or distribution, of electricity; • transmission, or distribution, of water; • receipt, or storage, or distribution, of oil and gas products; • refining, or processing, of oil and gas products; • beneficiation of minerals and primary metal production, including alloy production; • charitable activities.
A joint venture for the operation of passenger bus services is not a joint venture for a purpose specified in subregulation 51-5.01(1) of the GST Regulations.
As the joint venture is not a joint venture for the exploration or exploitation of mineral deposits or for a purpose specified in the GST Regulations, the requirements of paragraph 51-5(1)(a) of the GST Act are not met.
Accordingly, the entities do not meet the requirements for approval as participants in a GST joint venture under subsection 51-5(1) of the GST Act where the purpose of the joint venture is to operate passenger bus services. History: This ATO ID was amended on 23 May 2003 to change the status of the decision from 'Decision Current' to 'Decision Current to 30 April 2003'. From 1 May 2003 transportation is a specified purpose for GST joint ventures [see paragraph (n) of subregulation 51-5.01(1) of the GST Regulations]. The ATO ID was also amended to change the heading 'Related Public Rulings (including Determinations)' to 'Related ATO Interpretative Decisions'.