Issue
Does the exclusion for cash delivery and collection from branches of Australian ADIs at item 29(a) in the table in subregulation 70-5.02(2) of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) apply to the acquisition of secure cash transportation services in relation to Automatic Teller Machines (ATMs), which are located at premises that are not occupied by an Australian Authorised Deposit-taking Institution (ADI)?
Decision
No. The exclusion for cash delivery and collection from branches of Australian ADIs at item 29(a) in the table in subregulation 70-5.02(2) of the GST Regulations (Item 29(a)) does not apply to the acquisition of secure cash transportation services in relation to ATMs, which are located at a premises that are not occupied by an ADI.
Facts
An ADI contracts with a cash management provider for the management of the cash contained in the ATMs operated by the ADI.
Under the arrangement a secure cash transportation provider collects the cash cassette from the ATM. The spent cash cassettes are delivered to the warehouse of the cash management provider where the cassettes are re-loaded.
The re-loaded cash cassettes are used to replenish each ATM at the time the spent cassette is collected.
All cash used in the cash cassettes of the ATMs is owned by the ADI. The cash is not purchased by, or sold or transferred to, the cash management provider.
The ATMs are located at business premises that are other than that used by the ADI in its operations, for example, supermarket or fuel outlets.
Invoices issued by the cash management provider in relation to these services are not accounted for under the ADI's branch network.
Reasons for Decision
Item 29(a) includes the following as a reduced credit acquisition: Item Reduced credit acquisition 29 Trustee and custodial services (except safe custody of money, documents and other things), including: (a) transfer of cash without purchase, sale or transfer of assets, excluding cash delivery and collection from branches of Australian ADIs; ... Paragraph 688 of Goods and Services Tax Ruling GSTR 2004 / 1 : reduced credit acquisitions deals with whether the acquisition of secure cash transportation services is a reduced credit acquisition. Specifically, it states: An acquisition of a secure cash transport service is an acquisition of a custodial service under item 29 even though such an acquisition would not normally be provided by a trustee or a custodian.
Item | Reduced credit acquisition
29 | Trustee and custodial services (except safe custody of money, documents and other things), including: (a) transfer of cash without purchase, sale or transfer of assets, excluding cash delivery and collection from branches of Australian ADIs; ...
While the acquisition of secure cash transportation services may qualify as a reduced credit acquisition under Item 29, it is specifically excluded under Item 29(a) where it is for the transportation of cash between branches of an Australian ADI.
In this case, the secure cash transportation services relate to the transportation of cash to and from ATMs which are located at business premises that are other than that used by the ADI in its operations, for example, supermarket or fuel outlets.
The word 'branch' is not defined in the A New Tax System (Goods and Services Tax) Act 1999 or the GST Regulations and therefore takes its ordinary meaning. The Macquarie Dictionary , 2001, rev. 3rd edn, Macquarie University, NSW relevantly defines 'branch' as: 4 . the local operating division of a company, chain store, library, or the like.
Therefore, the ordinary meaning of the word 'branch', in the context of the operations of an ADI, is the local operating division of an ADI.
The word 'branch,' as used by the financial services industry, is also considered. Whilst the word 'branch' is not defined in the relevant Acts which deal with the banking industry, the Australian Prudential Regulatory Authority (APRA, established under statute, has provided an understanding of the use of the word by Australian ADIs.
Relevantly APRA in its ADI Points of Presence publication explains that the level of service provided at a branch of an ADI is 'face-to-face' service, including accepting and withdrawing cash and other deposits, account management and credit and other lending services.
Therefore, when taking into account the ordinary meaning, and the meaning accepted by the financial service industry, the word 'branch', for the purposes of Item 29(a) in the table in subregulation 70-5.02(2) of the GST Regulations, means a local operating division of an ADI. The operating division is a fixed location or premises, from which, as a minimum, face-to-face service is provided including cash and other deposits and withdrawals, account keeping facilities and credit and other lending services.
It follows that the ATMs located at the relevant business premises do not constitute a branch of an ADI. Accordingly, the delivery and collection of cash cassettes from these ATMs is not the 'cash delivery and collection from branches of Australian ADIs'.
This is irrespective of whether such ATMs are serviced by branch staff of the ADI or accounted for by an ADI branch.
Accordingly, the acquisition of such services is a reduced credit acquisition under Item 29(a).