GST on Commercial Septic Waste

[LeeSnowy]

We have commercial operators in our shire that empty septic tanks and then dispose of the waste into our sewage treatment plant.

Is this GST exempt to the commercial operator?

[ken]

Who does the Contractor charge for the collection of Septic Waste!? Council or the Household!?

I am assuming they invoice Council for doing the collections and not the household!?

Off the top of my head, I would be saying that the collection on behalf of Council is not GST expempt per se, and the Contractor would charge Council GST.

It's a bit like where Council uses a contractor for Domestic Waste Management - under the Treasurers Division 81exemptions, the DWM Charge levied by Council (to the ratepayer) is exempt from GST but the contractors who collect the Domestic Waste still charge Council GST in their collection/service invoices...as it is only the levying of the DWM Charge on the public which is GST exempt, not the actual costs incurred by the Council (or Contractor) relating to the delivery of the service.

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The Treasurers Div 81 Determination can be found at:

http://www.comlaw.gov.au/ComLaw/Legisla ... 99&START=1

[LeeSnowy]

The operator charges the households/businesses for emptying the spetic tanks. Council invoices the operator for dumping the waste in the sewerage plant.

My query was whether the Council supply to the operator (dumping of waste) was GST exempt.

My research has taken me to GSTR 2000/25 but I'm not sure whether the GST exepmtion only applies between households and Council as in your example with DWM.

[LeeSnowy]

any further thoughts from anyone?

[ken]

Hi Lee,

You're certainly "on the money" with GSTR Tax Ruling 2000/25;

http://law.ato.gov.au/atolaw/view.htm?docid=GST/GSTR200025/NAT/ATO/00001

in relation to getting to the bottom of your GST question.

On review of the GSTR, I am in 2 minds!!

Mind 1 - GST is not chargeable:

Paragraph 42 states that: "A sewerage service includes a service of accepting and treating sewage and waste water at a sewage treatment plant..."

Accordingly, it could be argued that this paragraph means Council's acceptance of Sewerage Waste from the Contractor is still within the confines of a "sewerage service" and accordingly is GST Free - meaning Councils invoices to the Contractor should not include GST.

Mind 2 - GST is chargeable

Council's situation of (i) a sub-contractor emptying septic tanks and charging the household and (ii) then disposing of the waste at Council's Sewerage Treatment Works for which Council charges the Contractor could also be argued to fit into paragraphs 58 - 60 "Subcontracted Supplies".

On reading paragraphs 58-60, it could be said yoursituation is akin to their being 2 seperate supplies, (i) a supply between the Contractor & the Household and (ii) a supply between the Council and the Contractor.

Base on paragraph 60, the service bewteen the Council & the COntractor would not be GST Free.

Mind 1 or Mind 2 ???:

If I had to make my mind up...I would say the supply of waste acceptance services by Council to the Contractor (allowing the Contractor to sump the waste at Councils Treatment Plant) is covered by paragraph 42 & therefore the Invoice Council raises against the Contractor should be GST Free.


To GST or not to GST - does it really matter!?

Given that the Contractor is a Business & should be registered for GST, it really doesn't matter if Council is charging GST, as the COntractor will claim it back as an Input Tax Credit (ITC) and be no worse off than it would be if the service is GST Free & Council's Invoices do not include GST.

When in doubt, it's always better to err on the side of caution (and charge GST) in relation to invoices with other parties that can claim the GST as ITC's where there is doubt on whether the sevrice attracts GST or not. If you don't charge GST & the ATO comes along, does an audit, determines GST was applicable & requires both the GST & Interest, Council will have to pay for it all alone!! Better to charge GST, pass it onto the ATO and let the Contractor claim the GST back from the ATO. That way, no one loses!!

[LeeSnowy]

Thanks Ken, you thoughts mirror mine!