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Goods and Services Tax (GST) exemption for certain taxes, fees and charges (Division 81 of the GST Act)

Purpose

To inform local governments that the approach to exempting government taxes, fees and charges from GST has changed.

From 1 July 2011 any new taxes, fees and charges imposed by local governments will need to be assessed for GST status under amended law.

Local governments need to review the GST status of items currently exempt under the last Division 81 Determination and advise the Department of Local Government and Planning (the department) of changes by close of business Tuesday 15 November 2011.

Background

The Commonwealth Government replaced the Division 81 Determination listing approach to exempting government taxes, fees and charges from GST with a new self-assessment ‘principles-based’ approach, applicable from 1 July 2011.

Previously certain taxes, fees and charges were exempt if they were included on the Division 81 Determination made under the GST Act. The current determination will be grandfathered for one year until 30 June 2012. This gives local governments an opportunity to review the GST status of items listed on the Determination against the new legislative mechanism.

Read or download A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 1) from the ComLaw website.

Queensland’s exemptions are found in Part 4.

What do Queensland local governments need to do from 1 July 2011?

From 1 July 2011, the GST treatment of local government charges listed on the current determination will not change. However, local governments will need to work out the GST treatment for any new charge, including those imposed under a new or different legislative power.

The current determination will not apply from 1 July 2012. After this date, local governments will need to work out the GST treatment for all local government charges under the amended law.

This means local governments will need to review items on the current determination to work out if they will remain exempt from GST after 1 July 2012. After this date, all local government charges will be subject to GST if they:

  • do not fall within the exemptions provided under the amended law; and
  • satisfy the requirements of a taxable supply.

What local government charges are exempt from GST?

Until 1 July 2012 any local government charge listed in the current determination is exempt from GST. The following payments are also generally exempt from GST under the new Division 81 Determination:

  • Payment of an Australian tax (the explanatory memorandum to the bill indicates Australian taxes include local government ‘ordinary rates’).
  • Payment of government charges for the provision, retention or amendment, under an Australian law, of a permission, exemption, authority or licence.
  • Payment of a government charge for recording, copying, modifying, receiving, processing, searching for or allowing access to information.
  • Payment of an Australian fee or charge listed in a regulation that prescribes the payment as not being consideration.

However, the GST status of these charges can be changed through regulations made for Division 81.

After 1 July 2012, local governments will need to self assess whether taxes, fees or charges are subject to GST. The Australian Taxation Office provides guidance for payments to government agencies under Division 81 to assist with assessment.

The department does not provide technical or legal advice regarding the application of the GST law. It is recommended that local governments consult either the ATO or their external advisors for such advice.

Why do local governments need to advise the department if items have changed GST status as a result of the new arrangements?

The department has been asked to collect this information on behalf of Queensland Treasury. Once collected, Queensland Treasury will discuss discrepancies with other jurisdictions in order to determine whether regulations need to be developed on the basis that there are clear policy reasons for items to remain exempt.

The information must be provided to the Department by close of business on Tuesday 15 November 2011.

Where can I go for help?

The Office of Local Government hosts a quarterly taxation forum attended by representatives from the Australian Taxation Office, Queensland Treasury, state government departments and local governments.

Queensland local governments are welcome to attend and the next forum meeting is on Thursday 8 September from 9.30 am to 12.30 pm. Local governments interested in attending the forum should register their interest by email: This email address is being protected from spambots. You need JavaScript enabled to view it.