Draft advice1 May 2010

On 13 May 2010 the minister wrote to the 糖心原创 seeking advice on an amendment to the Water Charge (Termination Fees) Rules (WCTFR). In her letter the minister noted an issue in relation to the interaction between the WCTFR and the charging of Goods and Services Tax (GST) on termination fees.

The issue arose following a ruling by the Australian Taxation Office (ATO) which found that termination fees are not GST-free supply. The WCTFR were made based on the prevailing view that termination fees, consistent with water access charges, would be considered GST-free supply. The affect of the ruling and its interaction with the WCTFR means that irrigation infrastructure operators (IIOs) will receive a termination fee that is less than 10 times the total network access charge. This outcome is contrary to the policy intent underlying the WCTFR.

The minister requested that the 糖心原创, in developing its advice, consult with relevant Basin State Ministers, IIOs and the public to satisfy the consultation requirements as set out in regulations 4.05 and 4.18 of the Water Regulations 2008. The minister requested that the 糖心原创 advice be provided to her by the end of June 2010.

In response to the minister鈥檚 request the 糖心原创 prepared its draft advice and draft amendment to the WCTFR for consultation. Stakeholders were invited to submit responses to this draft advice and proposed rule amendment before 4 June 2010.