GST Ruling GSTR 2014/2 (issued on 17 December 2014) outlines the GST treatment of surcharges imposed on credit card transactions, surcharges imposed on debit card transactions, and fees payable for ATM services. It outlines the following GST treatment in relation to the services and transactions.
Credit card surcharge
The Ruling indicates that a credit card surcharge imposed by a merchant on a customer in respect of a credit card transaction forms part of the price for a supply of goods or services to the customer. The surcharge is part of the consideration payable by the customer for the supply of the goods or services made by the merchant, and where a surcharge is imposed on payment for more than one supply, the merchant can use any fair and reasonable method to apportion the surcharge.
In addition, the Ruling states that where an entity may act as an agent for a third party that supplies goods or services to the customer, but makes a separate supply to the customer of processing the transaction, the surcharge does not form part of the consideration for the supply of goods or services made by the third party. It also states that where a customer uses a credit card to satisfy an outstanding liability for a supply of goods or services and incurs a credit card surcharge, the surcharge is additional consideration for the supply of goods or services, and may cause an adjustment event.
According to the Ruling, where an amount is required to be paid by a specified date, and an additional fee or charge becomes payable if the amount is not paid by that date, the additional fee or charge is consideration for the supply of an interest in or under a credit arrangement. It is therefore consideration for an input taxed financial supply. It also states that where a customer incurs a credit card surcharge when paying for both the goods or services and the additional fee or charge under the credit arrangement, the merchant can use any fair and reasonable method to apportion the surcharge between the supplies.
The Ruling also states that a credit card surcharge imposed on a customer in respect of a credit card transaction used for a payment, or the discharging of a liability to make a payment, of an Australian tax or an Australian fee or charge subject to Div 81 has the same treatment as the underlying payment of the tax, fee or charge.
Debit card surcharge
According to the Ruling, a debit card surcharge imposed by the merchant on a customer in respect of a debit card transaction to pay for the supply of goods or services forms part of the price for the supply of the goods or services to the customer. It also states that where a customer uses a debit card to satisfy an outstanding liability for a supply of goods or services and incurs a debit card surcharge, the surcharge is additional consideration for the supply of goods or services, and may constitute an adjustment event.
The Ruling also outlines the following:
- a merchant that imposes a surcharge on a customer for withdrawing cash through a debit card transaction makes a taxable supply where the requirements of s 9-5 are satisfied. The merchant is supplying the customer with the service of accessing the relevant payment system through the use of the terminal to authorise the transaction.
- a fixed debit card surcharge imposed by a merchant on a customer in respect of a debit card transaction that includes both a supply of goods or services and a cash withdrawal forms part of the consideration for the underlying supply of the goods or services.
ATM services
The Ruling states that a fee imposed for an ATM service listed under subreg 40-5.09(4A) of the GST Regulations is consideration for an input taxed supply. However, a facility that is used to access a payment system other than the ATM system (ie EFTPOS) is not used to provide an ATM service under subreg 40-5.09(4A).
Changes from the Draft Ruling
The Ruling was previously issued as Draft GSTR 2014/D2 and contains changes. It includes 10 examples which considers various scenarios and outlines the GST treatment of the various scenarios.
Date of effect
This Ruling applies both before and after its date of issue.
ATO ID 2008/116 withdrawn
On 17 December 2014, the ATO withdrew ATO ID 2008/116 (GST and credit card surcharge for payment of an Australian tax, fee or charge). The ATO said the ID has been replaced by GSTR 2014/2 (see above). The withdrawn ID is available on the ATO Legal Database
Source: GST Ruling 2014/2