Issue
Is the payment to an Australian government agency (you) of a fee for pre-examination of a community plan, deposited plan or strata plan (plan) the provision of consideration under subsection 81-10(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) because it is a fee that is of a kind prescribed by paragraph 81-10.01(e) of the A New Tax System (Goods and Services Tax) Regulations (GST Regulations)?
Decision
Yes, the payment to you of a fee for pre-examination of a plan is the provision of consideration under subsection 81-10(2) because it is a fee that is prescribed by paragraph 81-10.01(e) of the GST Regulations.
Facts
Unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 .
You are an Australian government agency established by State law and are registered for GST.
A land owner who requires the registration of a plan must lodge an application for registration and pay a fee to you.
The application for registration of the plan is for the purpose of altering the legal identity of the land by: • subdividing a parcel of land; • subdividing a parcel of land to allow multiple occupancy and separate ownership of individual lots; and • developing a planned community where the use of some of the land is shared.
Upon the registration of the plan by you, the following actions occur: • the prior title is cancelled or for a leasehold strata plan a notification is entered on the prior title referring to the strata plan and associated leases; • the plan and other specified documents are processed to be placed on public record; and • a certificate of title is created for the new legal identity of the land.
Prior to the lodgment of an application for registration of a plan a land owner may pay a fee to you for a review of the draft plan to ensure that it complies with the legislative requirements.
Pre-examination of a draft plan is not a compulsory requirement in the process of seeking registration of a plan.
For GST purposes, the fees for the registration of the plan and the pre-examination of the draft plan are Australian fees or charges because they are: • a fee or charge and are not a tax; • imposed under an Australian law; and • payable to an Australian government agency.
Reasons for Decision
Subsection 81-10(1) provides that a payment of a fee or charge that is of a kind covered by subsection 81-10(4) or 81-10(5) is not the provision of consideration.
However, subsection 81-10(2) provides that a regulation can be made to treat the payment, or the discharge of the liability to make such a payment, of an Australian fee or charge as the provision of consideration for a supply.
Fees relating to permissions etcetera
Subsection 81-10(4) 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).
Although the pre-examination of a plan will not, in itself, give rise to the provision of a permission, exemption, authority or licence, (permission etc) the pre-examination fee will be covered by subsection 81-10(4) if the fee 'relates to' or 'relates to an application for' the provision of such a permission etcetera.
It is therefore necessary to consider two things: • whether the registration of a final plan relates to the provision, retention or amendment under an Australian law of a permission etc (however described), and • if the answer is yes, whether the pre-examination of the draft plan relates to an application for the registration of the final plan. This point is relevant in determining whether subsection 81-10(4) and paragraph 81-10.01(e) of the GST Regulations apply.
Firstly, it is necessary to determine whether the fee relates to a permission etcetera for the purposes of subsection 81-10(4).
These words are not defined in the GST Act or the GST Regulations and therefore take their ordinary meaning in the context in which they are used.
The following definitions are drawn from The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01 .
Permission is defined as '1. the act of permitting; formal or express allowance or consent. 2. liberty or licence granted to do something'. Authority is defined as '7. a warrant for action; justification'.
We consider that the registration of a plan is the provision of a permission for the purposes of subsection 81-10(4). Registration of the plan permits the land owner to deal with or otherwise use the real property based on the new legal identity of the land.
Goods and Services Tax Ruling GSTR 2003/9: Goods and Services Tax: financial acquisitions threshold (GSTR 2003/9) provides that the words 'relates to' must be read in the context in which they appear and courts have ruled that the terms be interpreted in accordance with the intent of the relevant statute.
On the basis that we consider that registration of a plan is the provision of a permission, we also consider that a fee or charge for the pre-examination of a plan prior to lodgment of a plan for registration also relates to an application for the provision of a permission for the purposes of subsection 81-10(4).
As pre-examination of a plan is a service used by the land owner associated with the process of seeking registration of a final plan, it is considered that a fee or charge imposed on land owners to access the service relates to an application to which subsection 81-10(4) applies.
Subsection 81-10(5) 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.
The fees or charges for the pre-examination of a plan relate to the agency doing some of the activities that are listed in paragraphs 81-10(5)(a) to 81-10(5)(g). Specifically, we consider that the fees or charges relate to the agency receiving and/or processing information under paragraphs 81-10(5)(e) and 81-10(5)(f).
As the fees are of the kind covered by subsections 81-10(4) and 81-10(5), subsection 81-10(1) applies and these payments are 'not the provision of consideration.'
However, a fee or charge covered by subsection 81-10(1) may still be subject to GST where subsection 81-10(2) applies.
Subsection 81-10(2) provides that 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 GST Regulations.
For the purposes of subsection 81-10(2), the following kinds of Australian fees or charges are prescribed in GST Regulation 81-10.01: (a) ... (e) a fee for pre-lodgment advice if: (i) the advice relates to an application to which subsection 81-10(4) of the Act applies; and (ii) it is not compulsory to seek the advice;
Paragraph 81-10.01(e) of the GST Regulations is relevant to a fee or charge for pre-examination of a plan.
We consider that the fee for the pre-examination of the draft plan is a fee for pre-lodgment advice. In addition, we have previously determined that the pre-examination of the draft plan relates to an application to which subsection 81-10(4) applies.
On the basis that the fee for the pre-examination of the draft plan is a fee for pre-lodgment advice which relates to an application which is covered by subsection 81-10(4) and it is not compulsory to seek that advice, the requirements of paragraph 81-10.01(e) of the GST Regulations are satisfied.
This means that subsection 81-10(2) applies because the payment is an Australian fee or charge that is a kind which is prescribed in the GST Regulations.
Even though it is considered that subsection 81-10(5) may also apply to the fee or charge for pre-examination of a plan, subsection 81-10(2) prevails.
Accordingly the relevant fees and charges are consideration for a supply. Therefore the supply to which this fee relates will be a taxable supply where all of the conditions in section 9-5 are satisfied.