The Assistant Treasurer, Chris Bowen MP, today announced that the GST law will be changed to ensure that no customers will be charged GST on automatic teller machine transaction fees when ATM owners start charging ATM users directly for withdrawals from 3 March 2009. ATM transactions will be input taxed supplies for all ATM owners.
"Inconsistent GST treatment of ATM transaction fees would have unfairly disadvantaged certain ATMproviders and their customers and harmed competition," Mr Bowen said.
"Consumers should not need to know who owns an ATM to know the GST treatment of any charges.
"Without changes to the GST law, ATM transaction fees would have had different GST treatment depending on the owner of the ATM.
"Customers using ATMs owned by approved deposit-taking institutions (ADIs) would not have been charged GST on transaction fees, while those customers using ATMs not owned by ADIs would have been subject to GST."
The change to the GST law is necessary as a result of payment system reforms undertaken by the ATM industry and supported by the Reserve Bank of Australia (RBA).
The reforms will see the abolition of bilateral interchange fees paid by financial institutions to ATM owners and the introduction of an option for ATM owners to charge ATM users directly. The reforms are designed to improve competition in the ATM market and create incentives for broader provision of ATM services.
In order to provide legal certainty to some aspects of the reforms, the RBA last week announced the designation of the ATM system, and its intention to put in place an access regime that will make it easier for new entrants to participate in the system (see www.rba.gov.au).
The States and Territories have approved this change to the GST law.
The Assistant Treasurer encourages interested parties to provide comments on the policy design paper located on the Treasury website www.treasury.gov.au before 31 December 2008.
Further consultation will occur on the draft legislation in due course