GST treatment of waste disposal levy payment

Section 5 of the Goods and Services Tax Act 1985

Changes have been made to the Goods and Services Tax Act 1985 to clarify the tax treatment of the waste disposal levy, introduced on 1 July 2009, under the Waste Minimisation Act 2008. The amendment treats payments of this levy as consideration for a supply of services in the course or furtherance of a taxable activity and therefore as subject to GST.

Background

Most activities of public and local authorities are included within the GST base in line with the broad-base principle that GST applies to practically all supplies of goods and services. Some public or local authority levies are, for clarity, specifically made subject to GST, for example, road user charges and the fire service levy.

Key features

Section 5(6AC) of the Goods and Services Tax Act 1985 clarifies that the three central payments made in relation to the waste disposal levy are consideration for a supply of services made in the course or furtherance of a taxable activity. Those supplies are therefore subject to GST. These payments give rise to input tax credits when they are made in the course or furtherance of a taxable activity. The three payments are:

• payment of the levy from the user of a waste disposal facility to the operator of that waste disposal facility;
• payment of the levy from the waste disposal facility operator to the Secretary for the Ministry of the Environment, represented by the levy collector; and
• payment made from the Secretary for the Ministry of the Environment to funding recipients and for other payments described in section 30 of the Waste Minimisation Act 2008.

Application date

The amendment applies retrospectively from 1 July 2009 to align with the date on which the levy first applied.