FEDERAL COURT OF AUSTRALIA

IQ Renew Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [2026] FCA 1393

ORDERS

THE COURT ORDERS THAT:

1.    The applicant be granted leave to file a Further Amended Appeal Statement in the form handed up on 9 September 2026, and be granted leave to amend its grounds of objection to include the ground set out at paragraph 43B.

2.    The appeal be dismissed.

3.    The respondent file and serve written submissions and any affidavits on costs by 16 October 2026.

4.    The applicant file and serve written submissions and any affidavits on costs by 6 November 2026.

5.    The respondent file and serve written submissions and any affidavits in reply on costs by 20 November 2026.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKMAN J:

Glossary

1    In these reasons, the following defined terms have been used with the following meanings:

Introduction

2    This is an appeal from the Objection Decision concerning the Disputed GST Amount of $161,079.84, which IQ Renew included “under protest” as “Sales GST” in its BAS for the Tax Period. The appeal is brought to clarify the GST treatment of statutory payments made by EFC to IQ Renew as an MRF operator under the CDS.

3    By the Objection Decision, the Commissioner disallowed IQ Renew’s objection on the bases that:

(a)    IQ Renew makes a taxable supply of recycling services to EFC, and the CDS Refund is consideration for IQ Renew’s supply of particular recycling services to EFC; and

(b)    as there is a taxable supply to EFC, there is no excess GST and Div 142 does not apply, but if that were wrong, then IQ Renew has not discharged its onus of proving that it has not passed on the Excess GST to EFC for the purpose of s 142-10.

4    The central issues are therefore:

(a)    whether IQ Renew made a supply for consideration to EFC or the EPA in relation to the CDS Refund of $1,771,878.20 received by IQ Renew with respect to the July to September 2024 quarter; and

(b)    if the answer to (a) is “no”, whether IQ Renew is entitled to a refund of the Disputed GST Amount (as Excess GST) or whether Div 142 of the GST Act operates to deny that entitlement to a refund.

Relevant provisions of the GST Act

Taxable supplies

5    GST is payable on “taxable supplies”, which is defined in s 9-5 of the GST Act as follows:

You make a taxable supply if:

(a)    you make the supply for *consideration; and

(b)    the supply is made in the course or furtherance of an *enterprise that you *carry on; and

(c)    the supply is *connected with the indirect tax zone; and

(d)    you are *registered or *required to be registered.

However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

6    Paragraphs (b), (c) and (d) are not in issue in these proceedings, and the question is whether para (a) is satisfied; that is, whether the MRF made a “supply for consideration” in relation to the Processing Refund from EFC.

7    “Supply” is defined broadly in s 9-10(1) to mean “any form of supply whatsoever”. Section 9-10(2) further supports the breadth of the meaning of “supply” by stating that it includes any of the following:

(a)    a supply of goods;

(b)    a supply of services;

(c)    a provision of advice or information;

(d)    a grant, assignment or surrender of *real property;

(e)    a creation, grant, transfer, assignment or surrender of any right;

(f)    a *financial supply;

(g)    an entry into, or release from, an obligation:

(i)    to do anything;

(ii)    to refrain from an act; or

(iii)    to tolerate an act or situation;

(h)    any combination of any 2 or more of the matters referred to in paragraphs (a) to (g).

8    “Consideration” is relevantly defined in s 9-15 as follows:

(1)    Consideration includes:

(a)    any payment, or any act or forbearance, in connection with a supply of anything; and

(b)    any payment, or any act or forbearance, in response to or for the inducement of a supply of anything.

(2)    It does not matter whether the payment, act or forbearance was voluntary, or whether it was by the *recipient of the supply.

9    Section 195-1 also provides that in the GST Act, except so far as the contrary intention appears:

consideration, for a supply or acquisition, means any consideration, within the meaning given by sections 9-15 and 9-17, in connection with the supply or acquisition.

10    It is common ground between the parties that the word “for” in the expression “supply for consideration” in para 9-5(a) identifies the character of the connection which is required between the consideration and the supply, and that the word “for” in this context means “in order to obtain”, following AP Group Ltd v Federal Commissioner of Taxation [2013] FCAFC 105; (2013) 214 FCR 301 (AP Group) at [33] (Edmonds and Jagot JJ).

Division 142

11    Division 142 operates to deny the entitlement to recover overpaid GST in certain circumstances. Pursuant to s 142-5(1), the provisions are engaged where an entity’s “assessed net amount for a tax period takes into account an amount of GST exceeding that which is payable”, referred to as “excess GST”.

12    Section 142-10 blocks the entitlement to a refund of “excess GST” in certain circumstances, relevantly as follows:

142-10 Refunding the excess GST

For the purposes of each *taxation law, so much of the excess from subsection 142-5(1) (the excess GST) as you have *passed on to another entity is taken to have always been:

(a)    payable; and

(b)    on a *taxable supply;

until you reimburse the other entity for the passed-on GST.

Note 1:     If you reimburse the passed-on GST so that this section ceases to apply there will be an adjustment event under paragraph 19-10(1)(b) or (c). You will have a decreasing adjustment (see section 19-55) and the other entity may have an increasing adjustment (see section 19-80).

Note 2:     Any excess GST you have not passed on will be refunded as described in section 155-75 in Schedule 1 to the Taxation Administration Act 1953.

Note 3:    While this section applies, paragraph 11-5(b) (about taxable supplies) is satisfied for the corresponding acquisition by the other entity.

13    Section 142-25 assists in working out whether GST has been passed on, as follows:

142-25 Working out if GST has been passed on

(1)    Some or all of an amount of GST may have been passed on to another entity if:

(a)    a *tax invoice is not issued to or by that other entity; or

(b)    a tax invoice issued to or by that other entity relates to that GST, but does not contain enough information to enable that GST to be clearly ascertained.

(2)    If:

(a)    you issue a *tax invoice or a notice under section 84-89 to another entity, or another entity issues a *recipient created tax invoice to you; and

(b)    the invoice or notice contains enough information to enable some or all of an amount of GST to be clearly ascertained; and

(c)    in a case where you must pay the *assessed net amount for a tax period to which the invoice relates – you have paid that assessed net amount to the Commissioner;

the invoice is prima facie evidence of that part of that GST having *passed on to that other entity.

14    Section 142-15 relevantly provides as follows:

142-15 When section 142-10 does not apply

Commissioner satisfied it is inappropriate for that section to apply

(1)    Treat section 142-10 as never having applied to the extent that the Commissioner is satisfied that:

(a)    applying that section would be inconsistent with the principle that excess GST is not to be refunded if this would give an entity a windfall gain; and

(b)    you have requested a decision under this subsection in the *approved form.

Note:     Refusing to make the requested decision is a reviewable GST decision (see Subdivision 110-F in Schedule 1 to the Taxation Administration Act 1953).

(2)    The Commissioner must notify you in writing of any decision relating to you made under subsection (1).

15    There was also an issue between the parties concerning whether the November RCTI was a valid RCTI under the GST Act. However, in his oral submissions in reply, Senior Counsel for IQ Renew commendably conceded that the November RCTI was a valid RCTI under the GST Act and the RCTI Determination.

The CDS

16    On 1 December 2017, the CDS commenced in NSW. The EPA, a statutory body that reports to the Minister of the Environment as the primary environmental regulator for NSW, is responsible for the CDS. The EPA has various functions under the WARR Act, including those set out in s 6(1)(a)–(i) and Pt 5 of the WARR Act. The legislative regime for the CDS comprises: Pt 5 of the WARR Act; the CDS Regulations; and the MRF Protocol. The CDS operates broadly as follows:

(a)    Beverage Suppliers are required to pay contributions based on a fixed price per material type to fund the management, administration, and operation of the CDS;

(b)    a holder of an Eligible Container is eligible for a 10 cent CDS Refund where the container is returned to one of the Return and Earn Sites;

(c)    where the Eligible Containers are collected by councils through kerbside recycling, the MRF operator, and not the consumer, is entitled to claim the CDS Refund in respect of the Eligible Containers that become its property once they are delivered to its site. The MRF operator must enter into a “refund sharing agreement” with the relevant council if it requires one within 12 months of the commencement of the CDS, such that the MRF operator is not able to receive the refund unless an agreed proportion of that refund is passed on to the council.

17    The objects of the CDS are set out in s 19(1) of the WARR Act, and are as follows:

(a)    to recognise the responsibility that the beverage industry shares with the community for reducing and dealing with waste generated by beverage product packaging,

(b)    to establish a cost effective State-wide container deposit scheme to assist the beverage industry to discharge that responsibility and to promote the recovery, reuse and recycling of empty beverage containers.

18    The CDS is stated to include the following features in s 19(2):

(a)    it provides for the establishment of a Scheme Coordinator and network operators with responsibility for the administration of the scheme,

(b)     it provides for the payment of refund amounts to persons depositing at collection points empty beverage containers that are subject to the scheme,

(c)    it provides for the establishment by the Scheme Coordinator of a cost recovery scheme under which beverage suppliers agree to make contributions towards the cost of paying those refund amounts,

(d)    it prohibits the supply of beverages in containers that are subject to the container deposit scheme by beverage suppliers who have not agreed with the Scheme Coordinator to make those contributions,

(e)    it prohibits the supply of beverages in containers of a kind that are not approved by the EPA.

19    The objectives of the CDS were also relevantly set out in the Second Reading Speech to the Waste Avoidance and Resource Recovery Amendment (Container Deposit Scheme) Bill 2016 on 12 October 2016, which stated relevantly as follows:

… the Government acknowledges the kerbside recycling services already offer an effective and relatively low-cost system for collecting and recycling containers consumed at home. The aim of the Government has always been for the container deposit scheme to complement the kerbside system. Therefore, the amendment allows for an option for material recovery facilities, where kerbside materials are sorted for recycling after being collected from the kerbside, to be able to claim refund amounts on eligible containers directly from the scheme coordinator – see proposed section 28.

Allowing these facilities to claim refunds will reduce the incentive that they would otherwise have to manually separate out containers for redemption at a collection point. That outcome would add significant costs to the system for very little environmental benefit. Instead, material recovery facilities will be able to make use of Environmental Protection Authority [EPA] issued methodology to determine an accurate estimate of the number of eligible containers passing through the facility and being recycled and then claim the refund on these containers. How the process will work will be defined in the regulation and the scheme coordinator contract. The Government’s intention with this provision is also to ensure that these refunds are shared with local governments and communities that contract and pay for kerbside services supplying the material recovery facilities through negotiation between local governments and these facilities.

20    The CDS White Paper described the interaction between the CDS and existing kerbside collection as follows:

6.1    Under the Bill, eligible containers collected through comingled kerbside recycling will be redeemable for the 10c refund. The Bill proposes a method for redeeming these containers without having to manually separate them from the recycling stream. This will avoid additional handling and cost for containers that are being recycled anyway.

21    Division 2 of the WARR Act deals with the administration of the CDS and provides that the Minister may enter into written agreements (being scheme administration agreements) with persons in connection with the management and administration of the CDS (s 24(1)). There are two types of scheme administration agreements, namely a Scheme Coordinator Agreement and a network operator agreement (s 24(2)):

(a)    a Scheme Coordinator Agreement must include provisions requiring the Scheme Coordinator to enter into and give effect to arrangements with suppliers requiring the suppliers to pay to the Scheme Coordinator contributions towards the cost of the management, administration and operation of the Scheme (s 25(1)); and

(b)    such provisions as the Minister considers necessary to ensure that each Scheme arrangement required under the agreement specifies a methodology for determining the amounts payable under the arrangement, and that the Scheme Coordinator to whom the agreement applies does not act unfairly, or unreasonably discriminate, against or in favour of any particular scheme participant in negotiating, entering into, performing obligations under or enforcing any scheme arrangement (s 25(3)).

22    In the CDS White Paper, the role of the Scheme Coordinator was described in the following terms (at [3.3(c)]):

The Scheme Coordinator will act as a financial clearing house by collecting fees from the suppliers (to cover the refund, the handling fee and any necessary administration fees) and paying handling fees and refunds to the Network Operators …

The Scheme Coordinator will be entitled to recover from the suppliers an administration fee to fund its operation. Details relating to the calculation of the administration fee, and any limits on increases in that fee, will be set out in the contract of appointment.

23    Clause 6 of the CDS Regulations provides that for the purposes of Pt 5 of the WARR Act, the CDS Refund amount is 10 cents.

24    Section 28 of the WARR Act provides for the payments of CDS Refunds to the MRF operators, and relevantly provides as follows:

(1)    A Scheme Coordinator agreement may require the Scheme Coordinator to pay to material recovery facility operators refund amounts (processing refunds) for containers that are collected during the course of waste management services and that are processed by the operators for reuse or recycling.

(2)    The EPA may, by order published in the Gazette, issue a protocol (a processing refund protocol) to be applied in determining the amounts payable to material recovery facility operators as processing refunds under a Scheme Coordinator agreement.

(3)    Without limiting subsection (2), a processing refund protocol may set out the means for determining the estimated number of containers received, processed or dispatched by a material recovery facility operator, including by the use of audit or monitoring programs.

25    Division 3 of the CDS Regulations deals with payments of CDS Refunds to an MRF operator, and relevantly provides as follows:

18 Entitlement to processing refunds

(1)    Processing refunds are not payable to a material recovery facility operator in respect of containers obtained by the operator before the Scheme commencement day.

(2)    Processing refunds are not payable to a material recovery facility operator in respect of containers that have been collected in a local council’s area during the course of domestic waste management services, except in the following circumstances –

(a)    if there is no refund sharing agreement in force between the operator and the council -

(i)    the council has notified the EPA in writing that it considers that in the circumstances it is fair and reasonable that there is no such agreement in force, or

(ii)    the council has entered into a processing agreement with the operator on or after the Scheme commencement day;

(b)    if there is a refund sharing agreement in force between the operator and the council – the council has notified the EPA in writing that it considers the terms of the agreement to be fair and reasonable.

…

(5)    In this clause –

…

“refund sharing agreement” means an arrangement between a local council and a material recovery facility operator under which the operator agrees to pay to the council a proportion of all refund amounts paid to the operator by the Scheme Coordinator on or after the Scheme commencement day in respect of containers collected in the council’s area during the course of domestic waste management services.

…

19 Claims for refund amounts

(1)    A material recovery facility operator may make a claim for the payment of a processing refund by lodging with the Scheme Coordinator a claim in the form approved by the EPA.

(2)    Before a claim is lodged with the Scheme Coordinator, the claim must be assessed by an approved person for the purposes of determining whether the processing refund protocol has been correctly applied in determining the amount of the claim.

(3)    A claim must be accompanied by a declaration signed by an approved person certifying that, in the opinion of the approved person, the claimant has correctly applied the processing refund protocol in determining the amount of the claim.

(4)    A processing refund is not payable in respect of any container that has not been–

(a)    recycled by the claimant, or

(b)    delivered to a recycling facility in Australia or consigned for transport to a recycling facility in a foreign country.

…

20 Disposal of containers

(1)    A material recovery facility operator must not permit any container in respect of which the operator has made a claim for the payment of a processing refund to be disposed of to landfill.

(2)    A material recovery facility operator must not make a claim for the payment of a processing refund in respect of any container that –

(a)    the operator has permitted to be disposed of to landfill, or

(b)    the operator knows has been disposed of to landfill.

26    A penalty is payable if the MRF operator contravenes reg 20.

27    On 18 August 2017, the initial MRF Protocol was made by the EPA under s 28(2) of the WARR Act. Subsequent MRF Protocols were made by the EPA on 7 February 2020 and 1 April 2022, in similar terms. The current MRF protocol includes the following:

(a)    The MRF Protocol sets out the methodology to be applied by the Scheme Coordinator to determine the amounts payable to the MRF operator and the process the MRF operator must use to claim and receive refunds under the CDS (Section 1).

(b)    The stated aims and objectives of the MRF Protocol are to: protect the integrity of the CDS, maximise legitimate returns to communities, support equity between participants, and promote efficiency (Section 4).

(c)    The steps for an MRF operator to claim refunds are set out in Section 5, as follows:

(1)    Step 1 – confirm existing eligibility to claim under the CDS. In accordance with s 20 of the WARR Act, an MRF operator is eligible to claim if it holds a relevant statutory licence authorising the processing of domestic waste or is approved by the EPA as an MRF operator.

(2)    Step 2 – submit the Eligibility Confirmation form to the Scheme Coordinator, including the Nominated Claim Method to be used. Two methods are available (Appendix A):

(A)    Method 1 Weighing (Eligible Container Factor) Calculation: an estimated number of Eligible Containers calculated by the total weight of material type multiplied by the Eligible Container Factor for that material type. The eligible container factor for each quarter is calculated by the EPA using data from sampling carried out by the Scheme Coordinator (Section 10); and

(B)    Method 2 (Direct Counting) Calculation: the total number of Eligible Containers.

(3)    Step 3 – An MRF Operator must measure and record the flow of all material entering the MRF (input materials) and leaving the MRF (output materials) at the time the materials enter or leave the MRF – using calibrated and verified weighing equipment or weighbridges. An MRF operator must also record material received from different sources and record material that is delivered to a recycling facility in Australia, material consigned for transport to a recycling facility in a foreign country, material recycled by the MRF operator, and material delivered to landfill.

(4)    Step 4 – An MRF Operator must submit to the Scheme Coordinator a monthly and annual throughput reconciliation including a breakdown of the inputs, outputs and stock on hand for each MRF for which refunds are to be claimed.

(5)    Step 5 – An MRF Operator may submit one claim for each MRF they operate for a CDS Refund at the end of each quarter, using a form approved by the EPA. The claim must be submitted no later than 28 days from the last day of the quarter.

(d)    Section 7 deals with the assessment and payment of claims and states that “[t]he Scheme Coordinator must pay a MRF operator for a valid processing claim in accordance with the Act, Regulation and Protocol”. The section sets out a 5-step process including (1) validating a claim, (2) determining adjustments for non-compliance, (3) assessing amounts payable, (4) issuing a claim assessment, and (5) payment.

28    The Scheme Coordinator, EFC, entered into an agreement with the Minister for the Environment for NSW, being the Scheme Coordinator Agreement. IQ Renew was not a party to that agreement and has seen a copy of it only as a consequence of its production during these proceedings. The Scheme Coordinator Agreement is subject to a suppression order made on the EPA’s request pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), and I have avoided disclosing in these reasons the aspects which the evidence filed by the EPA establishes to be confidential.

29    The terms of the Scheme Coordinator Agreement include the following:

(a)    the Scheme Coordinator is required to perform the Services (cl 4.1), defined to include the Scheme Coordinator Services being “all services, things or tasks which the Scheme Coordinator performs, or is or may be required to perform, to comply with its obligations under this Agreement, the Act, the Regulation and the Processing Refund Protocol for the management, administration and operation of the Scheme including the Services described in the Services Specification” (Sch 8, Glossary of Terms);

(b)    the Scheme Coordinator acknowledges that the Administration Fee (defined to have the meaning given in the Scheme Payments and Contribution Methodology in Attachment 4) allows for all direct and indirect costs, the provision of all Scheme Coordinator Plant and Equipment, materials and other work necessary for the provision of the Services, whether or not expressly mentioned in this Agreement or otherwise (cl 11.1);

(c)    any references to fees, value, sales, revenue or a similar amount is exclusive of GST (cl 20.2(h));

(d)    if GST is or becomes payable on any supply made by a party under or in connection with the Agreement, any amount payable or consideration to be provided is exclusive of GST and an additional amount will be payable by the party providing consideration for that supply equal to the amount of GST payable (cl 20.2(c)(i) and (ii)); and

(e)    Schedule 7 provides for an annual Scheme Coordinator Fee.

30    As the Scheme Coordinator appointed under the Scheme Coordinator Agreement, various obligations are imposed on EFC, including to:

(a)    establish, manage, administer and operate the Scheme (cl 4.1(a));

(b)    perform the Services in accordance with, inter alia, the WARR Act and the CDS Regulations (cl 4.2);

(c)    execute a Supply Arrangement with each Supplier (defined in s 20 of the WARR Act as a person who carries on a business that is or includes the supply of beverages in containers, unless excluded by the regulations) (cl 12.3(a), and see cl 13.3(a));

(d)    use its best endeavours to ensure that each Supplier pays to the Scheme Coordinator that Supplier’s contribution towards the cost of the management, administration and operation of the Scheme in accordance with the methodology set out in Attachment 4 to the Agreement (being the Scheme Payments and Contribution Methodology) (cl 13.3(e)(iii));

(e)    generate and assign a unique identifier (in a form to be determined by the EPA) to the Supply Arrangement and provide it to the EPA and the Supplier (cl 13.3(h));

(f)    maintain a register, accessible at all times by the EPA through the Scheme Coordinator’s dedicated online portal, which contains an updated list of all Supply Arrangements currently in effect (cl 13.3(i));

(g)    establish an interest-bearing account (known as the Scheme Payments Account) and hold all monies in the account and all monies paid to the Scheme Coordinator by Suppliers in relation to Supply Arrangements and other payments to which it becomes entitled under the Scheme Payments and Contribution Methodology (except the Administration Fee) on trust for the State, to be dealt with in accordance with the Scheme Payments and Contribution Methodology (cl 13.2(a) and (b));

(h)    use the Scheme Payments Account solely for the purpose of making and receiving payments in accordance with the Scheme Payment and Contribution Methodology and not for any other purposes (cl 13.2(c));

(i)    use its best endeavours to obtain from each Supplier its contribution towards the cost of the management, administration and operation of the Scheme to be calculated in accordance with the Scheme Payments and Contribution Methodology and the Supply Arrangement (cl 13.6);

(j)    carry out the functions of the Scheme Coordinator specified in, and in accordance with, the MRF Protocol (cl 13.8(b));

(k)    pay to the MRF operators the amounts determined in accordance with the MRF Protocol, the Scheme Payments and Contribution Methodology (cl 13.8(c));

(l)    if a processing refund claim for payment of the Processing Refund made by an eligible MRF operator is received by the Scheme Operator within 28 days of the end of the quarter in respect of which the claim is made, the Scheme Coordinator must issue the relevant MRF operator a claim assessment in accordance with the MRF Protocol within 45 days of receipt of the processing refund claim (cl 13.8(d));

(m)    within 10 Business Days of issue by the Scheme Coordinator of a claim assessment in accordance with the MRF Protocol, the Scheme Coordinator must pay to the MRF operator the Refund Amount as calculated in accordance with the MRF Protocol (cl 13.8(e));

(n)    not accept a processing refund claim by an MRF operator which is not accompanied by a declaration signed by a person approved by the EPA that the MRF Protocol has been correctly applied for the purposes of reg 19 of the CDS Regulations, and refusing a processing refund claim if it reasonably determines that the claim has not been made in accordance with the MRF Protocol (cl 13.8(f)–(h)); and

(o)    not pay any processing refunds to MRF operators other than in accordance with the WARR Act, the CDS Regulations and the Scheme Coordinator Agreement (cl 13.8(j)).

Salient Facts

31    Mr Knowles, the General Manager of IQ Renew, made an affidavit dated 4 December 2025. References to paragraph numbers in this section of the reasons for judgment are references to paragraphs in that affidavit. Mr Knowles was cross-examined, and I found him to be a reliable and credible witness, whose evidence I accept.

32    IQ Renew is registered for GST and is the representative member of a GST group that includes the wholly owned subsidiaries of the IQ Renew corporate group: at [8]. The Facility was purchased in October 2010 by Par Recycling, which became a wholly-owned subsidiary of IQ Renew on 27 February 2018: at [8].

33    IQ Renew’s business involves the collection, sorting and processing of mixed recyclables received from household and business recycling bins. The majority (about 95%) of the material is received pursuant to agreements entered into directly with local councils, or with third parties who have agreements with councils, with respect to materials collected through “yellow bin” collections; while a small proportion of materials (about 5%) is received from “yellow bin” collections from commercial enterprises such as shopping centres: at [20] and [36]; Mr Knowles at T80.36–43. All materials received by the Facility were and are received, sorted and processed in the same manner both prior to and following the commencement of the CDS: at [20]. At all relevant times, both prior to and following the commencement of the CDS, the materials were sorted into different commodities to maximise the capacity for those commodities to be recycled or reused and to minimise the residual waste to be sent to landfill. That approach has been adopted in order to maximise IQ Renew’s commercial profits, to comply with its obligations to those entities from whom the materials are collected (mainly local councils), and to comply with its EPA Licence: at [30].

34    All material coming into the Facility is weighed, by taking the difference in the weight of trucks measured at the weighbridges at the entrance to the Facility and at the exit from the Facility: at [19] and [21]. Upon delivery, the material is unloaded and becomes the property of IQ Renew: at [21]. The date, time, customer and weight of each load of material is recorded, allowing IQ Renew to charge the appropriate gate fee to the customer and ensure that its material intakes comply with its EPA Licence: at [21]–[22].

35    The material received by the Facility is loaded onto a series of conveyor belts and is sorted into different commodities using mechanical and optical sorting machines. Broadly, the sorting process can be described as follows (at [26]–[28]):

(a)    the following items are manually removed:

(i)    soft plastic products such as bread bags and plastic food packaging;

(ii)    large steel items; and

(iii)    gross contamination, including hazardous items such as batteries, gas bottles and general non-recyclable items;

(b)    cardboard is separated and bailed;

(c)    glass is separated, broken into small pieces and deposited into a storage area; this can include glass from Eligible Containers under the CDS and other sources of glass, and the process is the same irrespective of the source of the glass;

(d)    the remaining material is separated into the following commodities and bailed: paper, steel, aluminium, mixed plastics, and residual contaminants and non-recyclable materials (including general and green waste incorrectly put into a recycling bin).

36    The sorted glass, steel, aluminium and mixed plastics may include Eligible Containers under the CDS. The sorting and processing does not distinguish between Eligible Containers and non-eligible containers and is the same, irrespective of whether they are eligible material or not: at [29].

37    The sorted commodities are dealt with by IQ Renew as follows (at [31]):

(a)    paper, cardboard, aluminium, steel and mixed plastics are sold to third party recyclers on a price per weight basis;

(b)    glass is sold to a third party recycler on a price per weight basis or recycled directly by IQ Renew. About 80% of glass is processed by IQ Renew into high-quality manufactured aggregate sand substitute using its “Virtual Quarry Facility”. The recycled glass sand is available in five different grades. Regulations require this processed glass to meet certain criterial and testing requirements;

(c)    soft plastics are recycled directly by IQ Renew using its SPEC (soft plastics engineered commodity) facility, which turns the plastic into high grade materials ready to be used in manufacturing; and

(d)    residual waste is disposed of to landfill at the cost of IQ Renew.

38    All material coming into the Facility and leaving the Facility is weighed and separately recorded, including the date, customer and weight of material, using a software platform. These records are required in order to charge gate fees on material collected at the Facility, to charge third party recyclers for the supply of commodities leaving the Facility, and to carry out stocktakes of material held at the Facility in order to comply with the EPA Licences: at [33].

39    At all relevant times, the Facility has operated under the EPA Licence, which was initially issued to Par Recycling in 2011. On 18 November 2022, the EPA Licence was varied to increase the total processing at the Facility from 90,000 to 99,000 tonnes per annum: at [11].

40    Under the EPA Licence:

(a)    the Limit Conditions set out in cl 2 provide that IQ Renew is only allowed to receive material at the Facility which falls within the “waste” column in the table, being: non-chemical waste generated from manufacturing and services, municipal waste consisting of household domestic recycling waste set aside for kerb collection or delivered by the householder directly, and office and packaging waste: at [12]. Materials collected by the Facility can only be used for the “activities” set out in that table, being “Resource recovery” and “Waste storage”: at [14];

(b)    the Limit Conditions do not allow the Facility to receive general waste or green waste: at [13]. Non-recyclable or contaminated materials incorrectly put into recycling bins and received by the Facility are separated through the sorting process and the waste is disposed of to landfill at the expense of IQ Renew. Due to the high cost of sending material to landfill, IQ Renew looks to maximise the recycling and reuse of the material it receives. IQ Renew has a target of 7% of waste being sent to landfill: at [13]; and

(c)    the total amount of the authorised waste permitted at the Facility cannot exceed 2,021 tonnes at any one time and the total amount of authorised waste received by the Facility cannot exceed 99,000 tonnes over 12 months: at [15]. To ensure that IQ Renew complies with these requirements, IQ Renew keeps records allowing the calculation of the amount of authorised waste stored at the Facility on any particular day and amounts received during a particular period. The records also separately identify the materials sorted into commodities, including the residual waste/contaminants required to be sent to landfill: at [15].

41    Both prior to and following the commencement of the CDS, IQ Renew has filed an Annual Return confirming compliance with the EPA Licence and NSW Environmental Laws: at [16]. That return is in respect of all materials recycled through the Facility and does not differentiate material now eligible for the CDS Refund under the CDS. The Annual Return now confirms that IQ Renew has a certified Environmental Management System, which was incorporated into the Workplace Management Plan of IQ Renew prepared on 1 November 2023: at [17]. The Environmental Management System includes the following:

(a)    objects and targets set by executive management, including to maximise the recycling and reprocessing of waste with a target/KPI of a maximum of 7% waste;

(b)    Environmental Aspects, Impacts and Relevant Controls, including a table outlining the objects of reducing waste to landfill and to maximise the amount of recyclables and glass for beneficial reuse to meet client “acceptance criteria”. Customers may reject deliveries of bailed commodities (such as paper, cardboard and plastic) or impose penalties if it exceeds their contamination threshold. Glass recycling undertaken by IQ Renew is subject to certain criteria and testing before the recycled product can be used for particular purposes; and

(c)    section 3.10.2 requires that all solid waste be recorded on weighbridge record sheets to track the tonnage of incoming and outgoing solid and domestic waste and recyclables: at [18].

42    At all relevant times, the Facility has operated two weighbridges (each with two decks) on site which weigh all material coming into the Facility and all material exiting the Facility. The weighbridges are calibrated every 12 months. The weighbridges are integral to IQ Renew’s business, both commercially and to ensure regulatory compliance, as the weighbridges (at [19]):

(a)    provide the information necessary to ensure compliance with the EPA Licence (through the calculation of daily stocktakes and total material received and dispatched, regardless of whether that material is covered by the CDS);

(b)    allow the calculation of the gate fees charged (by weight) for materials delivered to the Facility;

(c)    allow the calculation of amounts charged (by weight) for commodities sold to third parties after they have been sorted and processed at the Facility; and

(d)    allow the calculation (by weight) of residual contaminated/non-recyclable materials which must be disposed of to landfill at the expense of IQ Renew.

43    Agreements between IQ Renew and councils for the collection of mixed recyclables are generally long-term, spanning a number of years: at [20]. Entry and renewal of these agreements always involves a tender process, whereby IQ Renew and other MRF operators lodge competing bids based on the tender documents prepared by the council: at [20]. As part of the tender process for new agreements, IQ Renew proposes a gate fee for the period of the agreement. Factors relevant to the determination of the proposed gate fee include the type of material to be collected, the likely proportion of contaminants and compaction levels. The gate fee is an important part of a tender as it is effectively the price for which IQ Renew is offering to provide its sorting and processing services and the price the council is willing to pay for those services: at [23]. The tender process involves a senior management team at IQ Renew working out the best price for which IQ Renew can carry out the processing services in accordance with the terms set out in the tender: at [35].

44    When IQ Renew acquired Par Recycling in early 2018, IQ Renew took over the following contracts between Par Recycling and local councils (directly or through third parties):

(a)    Gosford City Council and Wyong City Council (at [34(a)]); and

(b)    Pittwater, Manly, Mosman and Warringah Councils (at [34(b)]).

45    After acquiring Par Recycling, IQ Renew entered into the following contracts with local councils (directly or through third parties):

(a)    Willoughby City Council (at [35(a)]);

(b)    Central Coast Council (at [35(b)]);

(c)    Tamworth Regional Council (at [35(c)]);

(d)    Port Stephens Council (at [35(d)]);

(e)    Northern Beaches Council (at [35(e)]); and

(f)    City of Newcastle (at [35(f)]).

46    In addition to receiving collections from local councils, waste trucks from commercial collection operators (such as Veolia) may deliver materials collected from the “yellow bins” of commercial operators such as shopping centres. There are no written agreements for such collections and IQ Renew charges a fixed gate fee: at [23] and [36].

47    In all cases, the gate fee is calculated by reference to the weight of the material. An additional amount of GST is charged pursuant to the terms of the contract, and IQ Renew remits this GST in its BASs: at [25].

48    IQ Renew, and previously Par Recycling, have participated in the CDS since its introduction and have claimed CDS Refunds pursuant to the scheme. The Scheme Coordinator appointed under the CDS was EFC, and IQ Renew had no involvement in that appointment: at [37].

49    The introduction of the CDS did not impact the existing arrangements with councils held by Par Recycling, and no amendments were made to those agreements: at [38].

50    For pre-existing agreements, Par Recycling was required to enter into a refund sharing agreement with the local council or for the council to determine that it was fair and reasonable that there was no refund agreement (although no refund was required to be shared for the first 12 months of the CDS): at [39]. For agreements entered into after the introduction of the CDS, a refund sharing notification form was required to be lodged by the council, stating to the EPA whether the council had entered into a refund sharing agreement which the council considered to be fair and reasonable, or whether the council considered that it was fair and reasonable that there was no refund sharing agreement in force with the particular MRF operator: at [39]. There are two examples of refund sharing agreements in evidence, both dated 26 February 2019 between Par Recycling, on the one hand, and Mosman Council (CB3/1422, 1484) and Northern Beaches Council (CB3/1450, 1480) respectively, on the other hand. In broad terms, each provides for the council to receive 50% of the CDS Refunds after deduction of Par Recycling’s costs as an MRF operator. A refund sharing agreement was also required by Tamworth Regional Council (CB3/1488). A number of other councils now take the view that it is fair and reasonable not to enter into a refund sharing agreement with IQ Renew, namely Central Coast Council (CB3/1478), City of Newcastle (CB3/1484) and Willoughby Council (CB3/1486), although Central Coast Council and Willoughby Council previously did enter into refund sharing agreements with Par Recycling and IQ Renew respectively (Mr Knowles at T74.26–36). Port Stephens Council stated that it had entered into a new contract after 1 December 2017 for the collection and/or processing of waste materials (CB3/1490).

51    The introduction of the CDS did not impact the collection, sorting and processing operations at the Facility, except for the insertion of an access panel on an infeed conveyor to assist the Scheme Coordinator to carry out sampling activities: at [40]. This was not a requirement of the CDS, but was done to assist the Scheme Coordinator to carry out its sampling activities: at [40]. In his oral evidence, Mr Knowles explained that the access panel was like a cat flap but with the hinge on the side rather than at the top, and was about 1.2m long and 25cm high (T78.12–22). It cost about $30 to install (T78.24–26). It came about after the auditors said that they needed to be able to count individual aluminium cans, and IQ Renew made the suggestion that the easiest way to do that was to put a little cat flap in the conveyor to fill a bag for the auditors (T79.42–48).

52    The administrative tasks necessary for IQ Renew to make claims under the CDS have not substantially changed since the introduction of the CDS: at [41].

53    Claims are made quarterly and are generally completed around 21 days after the end of the quarter. The claims procedure is as follows (at [42]–[52]):

(a)    After the end of the quarter, IQ Renew receives an email from EFC stating that it plans to audit IQ Renew in accordance with the MRF Protocol for that quarter. The email attaches the Audit Checklist to be completed and requests the provision of the following information: monthly weighbridge reports of all incoming and outgoing material (including eligible and non-claimable material); evidence for all material delivered (including eligible and non-claimable material); monthly stock on hand reports for all streams of materials (including eligible and non-claimable material); and weighbridge calibration records: at [43]. In 2018 and 2019, the auditors attended the Facility but they have not done so in recent years: Mr Knowles at T60.12–18.

(b)    Mr Knowles completes the Audit Checklist and provides the requested information using information collated by IQ Renew in the ordinary course of its business operations, including monthly records collected by IQ Renew for each delivery to and from the Facility and a stocktake (prepared in the form of a spreadsheet) to ensure compliance with the EPA Licence: at [44]–[45].

(c)    EFC reviews the information and any issues are raised with Mr Knowles who seeks to resolve those issues in discussion with EFC: at [46].

(d)    Once the audit has been completed, Mr Knowles makes a claim for the refund through the EFC portal on the EFC website: at [47]. IQ Renew uses the information in the Audit Checklist to complete the claim, including: the stock on hand and the material leaving the Facility; the material coming into the Facility; the stock on hand on site on the last day of the claim; and the material leaving the Facility: at [47]–[52]. The process of entering data in the EFC portal typically takes approximately 10 to 15 minutes: at [52]; T70.29–30. In addition, it took Mr Knowles about two hours to collate and verify the information that he put into the EFC portal for the CDS refund claim in respect of the July to September 2024 period (T71.19–26).

54    At all times, IQ Renew elected to use Method 1 as set out in Appendix A of the MRF Protocol: at [53]. Method 1 estimates the number of Eligible Containers by reference to the total weight of the broader material multiplied by an “eligible container factor” calculated for each quarter, using sampling information collated by the Scheme Coordinator by reference to samples collected from MRF operators in NSW (including IQ Renew): at [55]. IQ Renew elected to use this method because, due to the high volume of co-mingled recyclables received by the Facility, it would be impossible without significantly changing the manner in which the material is sorted and processed to separately identify and count individual Eligible Containers within the material collected: at [54].

55    EFC is understood by Mr Knowles to have outsourced the sampling responsibilities to APC Waste Consultants, which collects samples from the comingled recyclables received by MRF operators. As those sampling activities relate to IQ Renew, they involve the removal of a sample of the material from a conveyor belt at the Facility, using the access panel discussed above: at [55]. The sample material is sorted by hand into eligible and non-eligible parts, which is a labour intensive and time consuming task: at [55]. Those appointed by EFC to undertake the sampling go to the Facility every quarter (Mr Knowles at T60.34–37), and are present for half a day to a day (T61.23–24). The samplers take the material to an isolated area of about five square metres, and review the material on site (T61.28–35). The costs of sampling are deducted from the CDS Refunds: at [55].

56    Different eligible container factors are published for different commodities that may be eligible for the refund. In the case of IQ Renew these are relevantly glass, aluminium and mixed plastics (noting that IQ Renew chooses not to claim a refund for Tetra Pak or steel containers): at [56]. The refund is determined by the weight of the broader eligible commodities multiplied by the eligible container factor for that quarter: at [57]. At the time IQ Renew claims the refund, the eligible container factor for the claim period is not available and the information provided to EFC (as set out above) relates solely to the weight and type of material coming in and out of the Facility. The eligible container factors are usually published shortly before the refunds are paid, with the respective eligible container factors included in the invoice provided by EFC with payment of the refund: at [57].

57    EFC pays the refund into IQ Renew’s bank account and issues IQ Renew with the EFC Invoice: at [58]. The form of the EFC Invoice has remained unchanged since the introduction of the CDS. The document sets out an estimate of the quantity of eligible containers for each commodity, calculated by applying the eligible container factor to the weight of the material, and a price payable for each Eligible Container (exclusive of GST) of $0.0909090909 with GST added and sampling costs deducted from the refund: at [58].

58    Where IQ Renew has an agreement with a local council for the sharing of refunds received under the CDS, the agreed amount is paid by IQ Renew to the council after the refund is received by IQ Renew. The shared refund is calculated by reference to the price set out in the EFC Invoice ($0.0909090909 per Eligible Container) and GST is charged on the shared amount: at [59].

59    On or about 25 November 2024, IQ Renew received the EFC Invoice for the CDS refund claim made for the September 2024 quarter (CB3/1821). The amount set out in the invoice was $1,771,878.20, stated to include GST of $161,079.84. On 9 December 2024, the amount of $1,771,878.20 was paid to IQ Renew: at [58].

60    The EFC Invoice states that: “The GST shown will form part of the total GST payable by the payee on the business activity statement (BAS) for the relevant tax period”. The EFC Invoice also contains the following:

Written Agreement

The recipient and the payee declare that this agreement relates to the above supplies. The recipient can issue tax invoices or adjustment notes in respect of these supplies. The payee acknowledges that it is registered for GST and that it will notify the recipient if it ceases to be registered. [That sentence is then repeated.] Acceptance of this recipient created tax invoice (RCTI) constitutes acceptance of the terms of this written agreement. Both parties to this supply agree that they are parties to an RCTI agreement. The payee must notify the recipient within 21 days of receiving this document if the payee does not wish to accept the proposed agreement.

61    On 28 February 2025, IQ Renew lodged its BAS for the Tax Period: at [60]. The amount of total GST on sales of $768,189 reported at Label 1A of the BAS included the Disputed GST Amount of $161,079.84 (being one eleventh of the Processing Refund received from EFC). IQ Renew did not consider the Processing Refund amount was subject to GST and the Disputed GST Amount was included in the BAS solely to enable IQ Renew to lodge an objection with the Commissioner disputing the GST treatment of the Processing Refund: at [61]. On the same day that the BAS was lodged, IQ Renew’s solicitors lodged an objection with the Commissioner: at [62]. Pursuant to s 155-15 of Sch 1 to the TAA, the Commissioner was treated as having made the Assessment (of the net amount of $198,271 for the Tax Period) on 28 February 2025.

62    On 3 October 2025, the Commissioner made the Objection Decision by disallowing the objection. Also on 3 October 2025, the Commissioner made the Section 142-15 Decision on the basis that the preconditions for a decision to be made under s 142-15(1) of the GST Act had not been met, because there was no Excess GST and therefore s 142-10 did not apply. An objection against the Section 142-15 Decision was not the subject of IQ Renew’s objection dated 28 February 2025 (the Section 142-15 Decision being made some 8 months later). IQ Renew lodged a separate objection against the Section 142-15 Decision on 2 December 2025, which the Commissioner has not yet decided. Section 14ZZ(1) of the TAA provides for a taxpayer who is dissatisfied with the Commissioner’s objection decision to appeal to this Court against the decision. This proceeding is an appeal against the Objection Decision. As the Section 142-15 Decision was not the subject of the Objection Decision, and the Commissioner has not yet determined the objection to the Section 142-15 Decision, the Section 142-15 Decision is not the subject of this appeal, as IQ Renew accepts.

63    On 17 October 2025, IQ Renew commenced this appeal against the Objection Decision.

Previous cases in relation to supply for consideration

64    In Commissioner of Taxation v Reliance Carpet Co Pty Ltd [2008] HCA 22; (2008) 236 CLR 342, the High Court held that a vendor of land was liable to pay GST on a deposit which was forfeited upon the purchaser failing to complete the sale. The deposit was held to be consideration for a supply consisting of the making of the contract, with its mutual executory rights and obligations, which became a taxable supply upon forfeiture of the deposit: at [35] and [40] (Gleeson CJ, Gummow, Heydon, Crennan and Kiefel JJ). The High Court held that it was sufficient for the Commissioner’s case that one of the characteristics of the deposit was that, upon its payment, it operated as security for the performance of the obligation of the purchaser to complete the contract, and was liable to forfeiture on that basis: at [28] and [36]. Further, the High Court said that the connection between the supply and what is received for it need not be direct: at [30]. The High Court said that no question of two “taxable supplies” arises in the situation of a completed contract in light of the provisions of Div 99 of the GST Act: at [42].

65    In Commissioner of Taxation v Qantas Airways Ltd [2012] HCA 41; (2012) 247 CLR 286 (Qantas), a majority of the High Court held that an airline company, which overbooked flights in anticipation that not all purchasers of fares would board their flights, made a taxable supply to passengers who failed to board their flights and did not claim a refund or credit, in that the conditions for which the fares were received were at least a promise to use best endeavours to carry the passenger and baggage, having regard to the circumstances of the airline’s business operations. The majority said that the word “for” in s 9-5(a) is not used to adopt contractual principles, but requires a connection or relationship between the supply and the consideration: at [14] (Gummow, Hayne, Kiefel and Bell JJ).

66    In Commissioner of Taxation v MBI Properties Pty Ltd [2014] HCA 49; (2014) 254 CLR 376 (MBI Properties), the High Court held relevantly that each of the entry into and the observance of an express obligation under a lease to provide use and occupation of the leased premises was a supply of residential premises: at [36]–[38] and [40] (French CJ, Hayne, Kiefel, Gageler and Keane JJ). The High Court cited Qantas for the proposition that it is wrong to consider that one transaction must always involve the making of just one supply, and also said that it is wrong to consider that the making of a supply must always involve the taking of some action on the part of the supplier: at [33]. I understand the reference to “some action” in the latter proposition as a reference to some physical act, as distinct from an act-in-law such as entering into a contract, because if one could make a supply by doing absolutely nothing (factually or legally) then it would deprive the word “supply” of any meaningful content.

67    The High Court said that, absent modification of the GST Act through application of a special rule, there is a supply whenever one entity (the supplier) provides something of value to another entity (the recipient), and that “something” can be anything and can be provided by any means: at [34]. Their Honours said that a transaction which involves a supplier entering into and performing an executory contract will in general involve at least two supplies: (a) a supply which occurs at the time of entering into the contract, in the form of both the creation of a contractual right to performance and the corresponding entering into of a contractual obligation to perform; and (b) a supply which occurs at the time of contractual performance, even if contractual performance involves nothing more than the supplier observing a contractual obligation to refrain from taking some action or to tolerate some situation during a contractually defined period: at [35].

68    The High Court also said that the expansive language of ss 9-10(2)(g) and 9-10(3) serves to emphasise that “the thing provided can be provided by means of the supplier refraining from acting, or by means of the supplier tolerating some act or situation, just as it can be provided by means of the supplier doing some act”: at [34]. That language is taken from s 9-10(2)(g) which refers to “supply” as including “an entry into, or release from, an obligation … to refrain from an act; or … to tolerate an act or situation”. The High Court’s paraphrase of that provision at [34] omitted the important prefatory reference to “entry into, or release from”. However, their Honours cannot be taken to have thought that the requirement of “entry into, or release from” in s 9-10(2)(g) could be ignored, as that element was expressly referred to elsewhere in their Honours’ reasons: see [6] and [35]. Accordingly, I do not understand the High Court at [34] to be saying that “supply” includes a situation of complete inactivity by the putative supplier. Indeed, the High Court’s conclusion was that in observing the covenant of quiet enjoyment under the lease, the lessor is appropriately characterised as engaging in an activity done on a regular or continuous basis in the form of a lease: at [37]–[38].

69    In TT-Line Company Pty Ltd v Federal Commissioner of Taxation [2009] FCAFC 178; (2009) 181 FCR 400 (TT-Line), the Commonwealth provided a rebate to passengers on fares for motorists accompanying their vehicles on ferries across Bass Strait, which reduced the fare charged by a ferry operator, and the ferry operator was reimbursed that amount monthly by the Commonwealth. The rebate was to be calculated to ensure that the net fare for a vehicle plus driver travelling in standard share cabin accommodation on a Bass Strait crossing would be comparable to the notional cost of driving an equivalent distance on a highway. The Full Court held that the Commonwealth’s payment to the ferry operator was part of the consideration for the supply of transport services to passengers, within the meaning of s 9-15(1) of the GST Act: at [18] (Emmett J) and [51] (Edmonds J, with whom Perram J agreed at [65]).

70    The reasons concerned the reference in s 9-15(1) to “consideration” including “any payment … in connection with a supply of anything”, and “any payment … in response to or for the inducement of a supply of anything”. No issue appears to have arisen concerning the language of making the supply for consideration in s 9-5(a). In the reasoning of Edmonds J (with whom Perram J agreed), the fact that the ferry operator had no enforceable entitlement to receive any payment under the rebate scheme even if it provided transport services to a passenger was rendered irrelevant to the question whether a payment was consideration for the purposes of the GST Act by the express words of s 9-15(2): at [47]. In any event, the payment might also be described as one made “in response to or for the inducement of the supply of travel service” to a passenger within s 9-15(1)(b) of the GST Act: at [49].

71    In Federal Commissioner of Taxation v Secretary to the Department of Transport (Victoria) [2010] FCAFC 84; (2010) 188 FCR 167 (Department of Transport), the Department of Transport paid a 50% subsidy in respect of the metered taxi cab fare (up to a specified maximum per trip and a specified maximum per year) for taxi cab transport to Victorian residents (referred to as “MPTP Members” after the Multi Purpose Taxi Program (“MPTP”)) with severe and permanent disabilities who were unable to use public transport independently. Participation in the MPTP was a condition attaching to the taxi cab licence. At the beginning of each relevant trip, the taxi cab operator would insert the card of the MPTP Member into the taxi cab’s EFTPOS terminal, and at the end of the trip, the fare payable by the passenger would be calculated as the metered fare less the MPTP component, which would be paid by the Department of Transport to the taxi cab operator. The Department of Transport, which was registered for the purposes of GST, claimed that it made “creditable acquisitions” under s 11-5 of the GST Act in respect of the MPTP payments, and that it was entitled to input tax credits.

72    A majority of the Full Court (comprising Kenny and Dodds-Streeton JJ, with Jessup J dissenting) held that the Department provided consideration by way of the MPTP payments for the supply made to it by the taxi cab operator, thus giving rise to input tax credits for creditable acquisitions under s 11-5 of the GST Act. The majority held that the Department of Transport acquired from the taxi cab operator the service of the transport of the MPTP member: at [45] and [47]–[48]. Further, the majority held that the taxi cab operator made two supplies, namely the supply of transport to the MPTP member, and the supply to the Department of Transport of the transport of the MPTP member, and each was a taxable supply because it was made in the course or furtherance of an enterprise that the operator was carrying on. Although the Department of Transport is a government entity, it is nonetheless capable of being subject to the general provisions of the GST Act: at [39].

73    The majority rejected the Commissioner’s submission that the only acquisition by the Department of Transport was at the time the taxi cab licence was granted, when the Department of Transport acquired the right to have the obligations under the licence performed, and the consideration for that acquisition was the grant of the licence: at [44]–[45]. The submission was said not to account for the MPTP payments, the occasion for which was not the grant of a taxi cab licence, and indeed a licensee could have operated a taxi cab under a taxi cab licence without the Department of Transport ever having made an MPTP payment (or having incurred a liability to do so) to that licensee: at [45]. The majority said that the Department of Transport acquired from the taxi cab operator a service, being the transport of the MPTP Member, when the MPTP member card authorised the trip as a MPTP trip: at [47].

74    The majority also said that account should be taken of the nature of the enterprise that was being conducted by the Department of Transport and of the evident purpose of the MPTP: at [53]. In light of those matters, the majority said that each MPTP payment was, in effect, a subsidy for taxi cab travel for an MPTP Member, in that under the MPTP, the Department of Transport assumed an obligation to fund in part the use of taxi cabs by persons unable to take ordinary public transport: at [56]. That did not mean, however, that there was only one supply, being the supply of transport to the MPTP Member. On the contrary, the majority held (at [56]) that there were two supplies, namely: (a) the supply of transport to the MPTP Member; and (b) the supply to the Department of Transport of the transport of the MPTP Member. The provision of the latter service to the Department of Transport was supported by two matters: first, the taxi cab operator was doing what the Department of Transport had in effect asked him to do when the MPTP member card was validated and the MPTP trip was authorised, upon the basis that the Department of Transport would make an MPTP payment; and second, the supply of this service of transporting the MPTP Member to the Department of Transport enabled the Department of Transport to fulfil its statutory objects and to perform its functions: at [56].

75    With specific reference to s 9-5 of the GST Act, the majority held that whether or not there was a taxable supply for the purposes of s 9-5 is to be determined from the perspective of the entity making the supply (which in that case was the taxi cab operator): at [59]. Nothing in the majority’s reasons suggests that that is determined by reference to the supplier’s subjective state of mind. However, a question arises as to how determining the issue from the perspective of the supplier is consistent with the second of the two matters referred to by the Full Court majority at [56] as supporting the conclusion that a supply was made to the Department of Transport, namely the fulfilment of the Department’s objectives and performance of its functions. In my view, the reference to that second matter is explicable by reason of the issue in that case being whether the Department made creditable acquisitions and was entitled to input tax credits under s 11-20 of the GST Act, the focus for which included what the Department was acquiring, rather than simply what was being supplied.

76    The majority said that the taxi cab operator was clearly making a taxable supply to the Department of Transport (as well as to the MPTP Member) because the supply to the Department of Transport (like the supply to the MPTP Member) was made in the course or furtherance of an enterprise that the taxi cab operator was carrying on, and the supply to the Department of Transport was made for consideration, being the MPTP payment made by the Department of Transport to the taxi cab operator: at [59]. In relation to the proposition that the supply was made for consideration, the majority cross-referred to their reasons at [66], where their Honours quoted the definition of “consideration” in s 9-15(1) of the GST Act. The majority said that MPTP payments were within s 9-15(1) because they were payments in connection with a supply of something, in that the Department of Transport agreed to pay (and paid) the MPTP payments to the taxi cab operator “for”, or, as s 9-15(1) has it, “in connection with” the supply to the Department of Transport of the transport of the MPTP Member: at [67]. To the extent that that statement might be read as treating the word “for” as synonymous with “in connection with”, it must be qualified by the next case to be discussed.

77    In AP Group, the Full Court dealt with a series of dealership agreements between a motor vehicle dealer and car manufacturers for certain payments to be made by the manufacturers to the dealer, as follows:

(a)    the agreement with Toyota provided that:

(i)    where a car sold to a fleet customer (at a lower price) had been purchased for sale to a private customer (at a higher price), Toyota would pay the dealer a “fleet rebate” representing the difference between the prices; and

(ii)    where the dealer, in accordance with Toyota’s program, arranged a sale of car models which were scheduled to be replaced, Toyota would pay the dealer a “run-out model support” payment;

(b)    the agreement with Ford provided that Ford would pay the dealer “retail target incentive” payments if the dealer achieved monthly and quarterly sales targets based on the numbers of cars sold; and

(c)    the agreement with Subaru provided that it would pay the dealer “wholesale target incentive” payments based on the dealer ordering cars from Subaru within certain parameters.

78    The Full Court held that the Toyota “fleet rebates” and “run-out model support” payments were consideration for the supply of cars by the dealer to its customers, but not consideration for the supply of services by the dealer to Toyota: at [43]–[46] (Edmonds and Jagot J); [56] (Bromberg J). In addition, Edmonds and Jagot JJ held that the Ford “retail target incentive” payments and the Subaru “wholesale target incentive” payments did not involve supplies by the dealer to Ford and Subaru respectively for consideration: at [48] and [53].

79    At the heart of the reasoning of Edmonds and Jagot JJ is the proposition (referred to above) that in the context of the expression “supply for consideration” in s 9-5(a), the word “for” means “in order to obtain”: at [33], with which Bromberg J agreed at [74]. A mere temporal connection, or satisfaction of a “but for” test, between the supply and the consideration is not sufficient: at [35]. Justices Edmonds and Jagot also accepted, as AP Group submitted, that all aspects of the arrangements between the dealer, the manufacturer and the customer had to be considered: at [42].

80    In analysing Toyota’s fleet rebates, Edmonds and Jagot JJ held that the supply need not be characterised as the supply of a service by the dealer to Toyota, being the service of supplying a non-fleet car to a fleet customer: at [44]. Their Honours held that, consistently with s 9-15(2) of the GST Act, it does not matter that the payment was by Toyota rather than the recipient of the supply, which in this case was the fleet customer: at [44].

81    By contrast with Toyota’s “fleet rebates” and “run-out model support” payments, the Ford and Subaru incentive payments were not triggered by the sale of a particular car, but were payments to encourage conduct relating to the overall management of the dealership, including sound ordering practices and clearance of old stock to make way for new stock, to the presumed mutual benefit of the dealer and the manufacturer: at [48]. Justices Edmonds and Jagot said that the so-called supplies for consideration identified by the Commissioner in the case of the Ford and Subaru incentive payments were nothing more than the encouragement of an overall business relationship between the manufacturer and the dealer to the mutual benefit of both: at [53]. Their Honours said that the overall relationship contemplated a continuing dialogue between wholesaler and retailer in which promises are routinely exchanged, but that to characterise this dialogue as involving supply after supply is “unrealistic and impractical”: at [53].

82    In terms of the element of incentive in the Ford and Subaru payments, their Honours said that a dealer will always wish to sell as many cars as practicable and to move old stock to make way for new stock, and will always wish its ordering arrangements to be the most efficient and economically beneficial to it, and the manufacturer will have the same objectives: at [53]. Their Honours said that the fact that the dealer receives a payment as an incentive when certain thresholds associated with running the business in that economically rational way does not mean that the dealer is supplying a service to the manufacturer for consideration: at [53]. Importantly for the present case, their Honours said that if the incentive payment were not available, there is no basis to infer that the dealer would not behave in the same way for free: at [53].

83    I draw from that analysis of the previous cases, and from the ordinary and natural meaning of the language used in ss 9-5, 9-10 and 9-15, the following propositions as to the meaning of making a “supply for consideration” in s 9-5(a):

(a)    the word “for” means “in order to obtain” (AP Group at [33]), and not some other connective concept such as “with the result that”;

(b)    a mere temporal connection, or satisfaction of a “but for” test, between the supply and the consideration is not sufficient: AP Group at [35];

(c)    the term “supply for consideration” does not depend on contractual principles: Qantas at [14];

(d)    there can be more than one supply in relation to a particular transaction: MBI Properties at [33]; Department of Transport at [56];

(e)    it does not matter that the payment is made by an entity other than the recipient of the supply: s 9-15(2) and AP Group at [44];

(f)    the supply need not involve a physical act, and may involve a legal act such as entering into a contract: MBI Properties at [33]–[35];

(g)    complete inactivity as a matter of fact and law cannot constitute the making of a supply: see the analysis above of MBI Properties at [33] and [34];

(h)    there is a supply whenever one entity (the supplier) provides something of value to another entity (the recipient), absent modification of the general operation of the GST Act through application of a special rule: MBI Properties at [34];

(i)    whether there is a supply for consideration is to be determined from the perspective of the supplier (Department of Transport at [59]), but is not determined by reference to the supplier’s subjective state of mind;

(j)    it is relevant (and may be determinative) to consider whether the supplier would have acted in the same way even if the consideration were not promised or provided: AP Group at [53]; and

(k)    the fact that the consideration is provided by a government entity does not mean that the supply is not subject to the GST Act: Department of Transport at [39].

Public GST Rulings

84    Section 357-60 of Schedule 1 of the TAA provides relevantly as follows:

(1)    Subject to subsection (5), a ruling binds the Commissioner in relation to you (whether or not you are aware of the ruling) if:

(a)    the ruling applies to you; and

(b)     you rely on the ruling by acting (or omitting to act) in accordance with the ruling.

(2)    You may rely on the ruling at any time unless prevented from doing so by a time limit imposed by a *taxation law. It is not necessary to do so at the first opportunity.

85    IQ Renew relies on two public tax rulings concerning GST, namely GSTR 2012/2 and GSTR 2006/9.

GSTR 2012/2

86    GSTR 2012/2 explains the Commissioner’s views on when a “financial assistance payment” is consideration for a supply. The term “financial assistance payment” is intended to encompass a wide range of payments, including payments made to provide support or aid to the payee, and payments provided to support or aid in the implementation of government policy and initiatives (at [5]). The legally binding section of GSTR 2012/2 comprises [2]–[93], and not [94] and following.

87    The ruling states that for a financial assistance payment to be consideration for a supply, there must be a sufficient nexus between the financial assistance payment made by the payer and a supply made by the payee, and that a financial assistance payment is consideration for a supply if the payment is “in connection with”, “in response to” or “for the inducement of” a supply (at [15]). The test is an objective one (at [15]). However, the ruling states that merely having any form of connection of any character between a supply and payment of consideration is insufficient to constitute a taxable supply, citing AP Group at [33] (at [15A]). Reference must be made to all of the surrounding circumstances of the arrangement (at [16]).

88    The ruling states that providing advice or information is a supply, and that a financial assistance payment has a sufficient nexus with such a supply where the payment is made for the purpose of obtaining the information (at [24]).

89    The ruling states that, in some circumstances, things may be supplied by the payee that are merely incidental or have an insufficient nexus to the financial assistance payment (at [40]). The following example (referred to as Example 6) is given of an insufficient nexus by way of the provision of information to substantiate expenditure:

41.    A business qualifies for a government financial assistance payment that is to promote the advancement of technology. For the purposes of the government agency’s own internal assurances, the business is required to provide a report to the agency outlining how the funds were expended.

42.    The payment is made to enable the business to improve its technological capability, not to obtain the report on how the financial assistance payment was expended. The financial assistance payment does not have a sufficient nexus with the supply of the report because the payment was not in connection with, in response to or for the inducement of the report.

43.    Therefore, there are no GST consequences for either party.

90    Pausing there, while one can well understand the conclusion arrived at, it should be noted that the ruling at [42] (as well as the statement at [24]) reframes the relevant question as being concerned with why the payment was made by the recipient, rather than with the relevant question under s 9-5(a) as to why the supply was made, and specifically whether the supply was made for consideration.

91    In a later passage, the ruling states that there will be some arrangements that do not involve the making of any supply whatsoever, and if no supply has been made then a key element of the definition of taxable supply is not met (at [55]). The following passage then appears at [56]:

In particular, there is no supply where the agreement between the parties is not binding and creates expectations alone. However, the payee may still make a supply in the absence of enforceable obligations. Where there is an agreement that does not bind the parties in some way there may still be a supply where there is something else, such as goods or some other benefit, passing between the parties.

92    The first sentence of that paragraph is dealing with wholly executory non-binding agreements where no performance has been rendered or benefit conferred. The third sentence is dealing with non-binding agreements where some performance has in fact been rendered such that something of benefit has been conferred as a matter of fact.

93    The statements at [55]–[56] are then illustrated by a number of examples, one of which is Example 12 as follows:

63.    A government agency offers prepared food retailers a rebate of up to $3,000 when they purchase and install a new commercial dishwasher in their kitchen. The dishwasher can be purchased from any retailer.

64.    To be eligible for the rebate the dishwasher must be installed in existing premises and the dishwasher must meet a specified energy efficiency rating. To obtain the rebate the prepared food retailer must submit an application form with copies of their purchase and installation invoices.

65.    The food retailer does not enter into any obligations, other than providing further evidence to support their claims in accordance with the eligibility criteria.

66.    Although the application submitted by the food retailer and the agreement to provide further evidence in support of their claim may meet the statutory definition of a “supply”, these supplies are not the reason for which the payment was made. Rather the payments were made in order to encourage and facilitate the purchase of the commercial dishwasher by the food retailers. The provision of evidence in support of the claim does not have a sufficient nexus with the payment and is merely incidental to it.

67.    The financial assistance payment is made once the food retailer has met the eligibility criteria. In meeting these criteria the food supplier is not supplying any good, service or anything else to the government agency.

68.    There are no GST consequences arising from the arrangement for either party.

94    Again, the reasoning at [66] reframes the statutory question as a question relating to why the payment (rather than the supply) was made. Putting that aspect to one side, the example is consistent with the conclusion to Example 6 above to the effect that the mere provision of information to substantiate expenditure is not a supply for consideration.

95    A later non-binding passage in the ruling deals with supplies that are part of making or accounting for the financial assistance payment as follows:

132.    Things are often supplied by the payee to the payer that are merely part of the mechanism of making or accounting for the financial assistance payment. These things are considered to form part of the circumstance in which a supply is made but are not of themselves the supplies for which the consideration is provided.

133.    For example, it is common for a payee to submit an application for financial assistance to the payer, and for the application to include all information necessary to determine the payee’s entitlement to a financial assistance payment. Providing information in the application is a supply to the payer. However, the payment is not consideration for that supply because the provision of the financial assistance was not made to obtain the information provided on the application form. Submitting the application, together with the information required to consider it, is merely a mechanism to establish whether a financial assistance payment will be made. There is an insufficient nexus between the payment and the supply in these circumstances.

96    Again, while one can well understand the conclusion which the ruling reaches, the third sentence of [133] focuses on why the payment was made, rather than with the statutory question as to why the supply was made. The fourth sentence is more closely aligned with the proper statutory question.

GSTR 2006/9

97    GSTR 2006/9 deals with supplies generally. Each of the 80 pages is stated to be legally binding. IQ Renew relies on the second of the case studies at the end of GSTR 2006/9, dealing with a bus company. In one example, the bus company is contracted by a Government Department to operate a bus service for transporting students who will pay discounted fares, and the Department agrees to pay the bus company an annual lump sum amount plus a top-up payment of 50% of the total full price student fare multiplied by the number of student fares taken in a year (at [270A]). The ruling emphasises that the bus company has a binding obligation to the Department to make a supply of bus services (at [270B]), and that the payment made by the Department is in response to the supply by the bus company to the Department (at [270B]). In this arrangement, the top-up payment made by the Department to the bus company is part of the total consideration for the taxable supply of operating the bus service, which is made by the bus company to the Department (at [270C]).

98    A further example given in this case study concerns a scheme introduced by the EPA to reimburse costs incurred by bus operators who convert their buses to be powered by natural gas, whereby operators will be required to submit evidence of any conversion expenses to the EPA for payment (at [271]). The ruling states the following at [272]:

The consequent reimbursement payments to the Bus Company from the agency are not made in connection with the supply to the Bus Company of converting the buses and as such are not consideration for the supply. The consideration for that supply has been paid by the Bus Company. The Bus Company acquired, and provided the consideration for, the supply of converting the buses and will be entitled to an input tax credit for that acquisition. The Bus Company does not make any undertaking or other supply to the agency in return for the reimbursements, it merely accepts the agency’s unilateral standing offer for reimbursement.

99    Earlier in the ruling, the Commissioner stated that he considers that an agreement that does not bind the parties in some way is not sufficient to establish a supply by one party to the other (at [102]). A more complete statement of the Commissioner’s position appeared a little later at [123], in which the Commissioner stated that “an agreement that does not bind the parties in some way is not sufficient to establish a supply by one party to the other unless there is something else, such as goods, services, or some other thing, passing between the parties”. That more complete statement of the Commissioner’s position is consistent with GSTR 2012/2 at [56], as discussed above. That is, there is no supply where the agreement between the parties is not binding, unless there is something else, such as goods or some other benefit, passing between the parties. I note also that the statement at [123] was made in the context of analysing tripartite arrangements, such that the concept of something else “passing between the parties” includes a party which is neither the supplier nor the payer. The statement at [123] is consistent with the introductory statement at [17] that the scheme of the GST Act is not so broad as to include “a supply arising out of the creation of expectations alone without more”.

Did IQ Renew make a supply to EFC or the EPA for, or in order to obtain, the CDS Refund?

IQ Renew’s submissions

100    IQ Renew submits that, in the context of the CDS and the broader arrangement between EFC and IQ Renew, there is an insufficient nexus between the CDS Refund and any acts of IQ Renew which may be said to constitute a supply. In oral address, Senior Counsel for IQ Renew described the CDS Refunds as “bounty” that “falls from the sky” (T115.28). IQ Renew accepts that the CDS Refunds were received by it “in the course of” continuing to provide collection and processing services (being supplies) under its contractual obligations with councils, and continuing to comply with its various obligations under the EPA Licence and the Environmental Laws. However, IQ Renew submits that the CDS Refund is not to be characterised as a payment “for, or in order to obtain” the carrying on of the processing or recycling activities of IQ Renew, including the recycling of materials which may include Eligible Containers. IQ Renew submits that it was already carrying out those activities as part of making supplies to councils before the introduction of the CDS, as it was required to do under its contracts with the councils, the Environmental Laws and the EPA Licence, and it continued to do so in the same manner.

101    As to IQ Renew’s contractual obligations with local councils for which it received the gate fee, IQ Renew submits that it was under an obligation to receive co-mingled recyclables collected from rate payers, and to process and store those materials to enable their recycling and re-use, with any materials that were unable to be recycled and re-used being disposed of to landfill. Further, in most cases, IQ Renew expressly promised that the material would be processed and recycled and that any material not processed, or unable to be recycled, would be disposed of in a lawful manner. As to its compliance with public law obligations to NSW under the EPA Licence and Environment Laws, IQ Renew submits that it had a certified Environmental Management System which set out objects and targets to maximise the recycling and reprocessing of waste with a target KPI of a maximum 7% waste, and a target of nil recyclables and nil reusable glass fines sent to landfill. Further, IQ Renew submits that, as a minimum standard for any landfilling in New South Wales, wherever feasible, resources should be extracted from waste and beneficially reused, citing the Environmental Guidelines: Solid Waste Landfills (2nd ed., 2016), p 1. In addition, IQ Renew submits that, due to the high cost of sending material to landfill, IQ Renew looked to maximise the recycling and reuse of the material it received. IQ Renew relies on the statutory text of s 28(1) of the WARR Act, which imposes a public law obligation on EFC as the Scheme Coordinator to pay a CDS Refund to MRF operators for containers that are collected “during the course of” waste management services, and that are processed by the MRF operators for reuse or recycling. IQ Renew submits that the statutory scheme is structured on the basis that MRF operators were already carrying out the necessary processing and recycling activities and with the expectation (but not the requirement) that the MRF operators would continue to do so; and if they did, they would have the option of participating in the CDS. IQ Renew relies on the passage from the Second Reading Speech extracted at [19] above, in which the Government acknowledged that kerbside recycling services “already offer an effective and relatively low-cost system for collecting and recycling containers consumed at home”, and referred to the aim of the CDS as being to “complement the kerbside system”.

102    Further, IQ Renew submits that the CDS Refund is not to be characterised as a payment “for, or in order to obtain” the compliance by IQ Renew with its obligations under the CDS or the MRF Protocol. IQ Renew accepts that there is a temporal connection between the CDS Refund and the MRF Protocol, in the sense that the CDS Refund will only be paid if IQ Renew complies with its obligations under the MRF Protocol, such as completing the claim. However, IQ Renew submits that a mere “temporal trigger” or a “but for” test with no more is not sufficient, citing AP Group at [35].

103    IQ Renew submits that, under the CDS, it has a legal imperative and commercial incentive to continue to carry out processing and recycling activities with respect to the sorting, processing and recycling of materials (which may include Eligible Containers) in the same manner as it did prior to the introduction of the CDS. IQ Renew submits that, seen in that context, the CDS Refund can be characterised in a similar manner to the incentive payments made by Ford and Subaru to the dealer which were at issue in AP Group, which were held not to be consideration for a taxable supply by the dealer, relying in particular on the reasoning of Edmonds and Jagot JJ at [53]. IQ Renew submits that it carried out processing and recycling with respect to co-mingled recyclables received at the Facility before the introduction of the CDS, and those activities did not change as a result of the introduction of the CDS, except for the administrative matters necessary to participate in the CDS and to claim the CDS Refund. IQ Renew submits that, similarly to the incentive payments by Ford and Subaru which were at issue in AP Group, there is no basis to infer that IQ Renew would not continue to carry out the same processing and recycling activities with respect to co-mingled recyclables (which may include Eligible Containers) without the CDS. In particular, IQ Renew submits that it was obliged by the Environmental Laws and its EPA Licence to operate the Facility in a compliant manner, and if it did not do so it could face prosecution and the loss of its licence. IQ Renew submits that it was the pre-existing statutory obligations which required it to operate the Facility in a compliant manner, alongside its contractual obligations to councils, which were to a similar effect.

104    Characterised in that way, IQ Renew seeks to distinguish the payments of the CDS Refund from the rebates paid by a government entity in Department of Transport and TT-Line. In both those cases, IQ Renew submits that the amount charged to the customer by the supplier was reduced by the amount of the rebate (with the rebate being paid directly by the government entity to the supplier). IQ Renew submits that the clear inference is that the suppliers would not have behaved in the same way if the rebates were not available.

105    IQ Renew submits that there is no obligation imposed by statute on it to carry out recycling activities or to make a claim for a CDS Refund, but accepts that there is likely to be an expectation that it (and other MRF operators) will continue to carry out recycling activities, as contracted to councils, in exchange for the consideration payable by the councils under contract, and will be entitled to receive the CDS Refund if they elect to make a claim. However, IQ Renew submits that the MRF Protocol and the CDS more generally do not impose any obligation on it to do so, and IQ Renew submits that an expectation that it would carry out recycling activities is not sufficient. If IQ Renew does not carry out any recycling activities and does not make a claim for the CDS Refund, IQ Renew submits that no recourse is available to EFC or the EPA under the CDS, except that CDS Refunds will not be payable.

106    IQ Renew submits that the CDS Refunds are properly characterised as “financial assistance payments” of the kind considered in the Commissioner’s GSTR 2012/2, which IQ Renew submits is binding on the Commissioner by reason of s 357-60(1) of Sch 1 to the TAA. The CDS Refunds are said by IQ Renew not to be a payment made by EFC to IQ Renew as part of a commercial agreement, but are funded by the Beverage Suppliers, and the payment is in the nature of a grant or incentive from the NSW Government for the purposes of furthering the objects of the CDS, as stated in s 19(1) of the WARR Act. IQ Renew submits that those objects include the promotion of the recovery, reuse and recycling of empty beverage containers, and the role of EFC as the Scheme Coordinator is one of a “financial clearing house” by collecting fees from the suppliers and paying CDS Refunds (as the CDS White Paper stated).

107    Consistently with that characterisation, IQ Renew submits that the information required to be provided by it to EFC in order to comply with its obligations under the CDS and the MRF Protocol, and to claim the CDS Refund, forms a part of the administrative framework through which the CDS is administered and monitored. IQ Renew submits that the Commissioner correctly accepted in the Objection Decision (at [22]) that none of the information requirements imposed on IQ Renew under the CDS framework are supplies for consideration, with the Objection Decision concluding (at [24]) that “the provision of evidence by you in support of a claim does not have a sufficient nexus with the payment of the refund and is merely incidental to it”.

108    IQ Renew submits that, in light of that concession, the contention by the Commissioner that IQ Renew nevertheless makes a supply to EFC of “recycling eligible containers in a CDS-compliant way” becomes “an empty vessel” for the following reasons:

(a)    The CDS was introduced on the basis that (i) IQ Renew (and other MRF operators) were already effectively and cost-efficiently sorting, processing and recycling kerbside materials (which may include Eligible Containers under the CDS) and, in the expectation that those recycling activities would continue, (ii) IQ Renew (and other MRF operators) were given the option to participate in the CDS without the need to change those activities, and (iii) the EPA was tasked with issuing that MRF Protocol to estimate the number of Eligible Containers passing through the facility to allow the CDS Refund to be readily calculated.

(b)    Consistently with this statutory purpose, the sorting, processing and recycling activities of IQ Renew did not change as a result of the introduction of the CDS. No obligation is imposed on IQ Renew to trace each Eligible Container to establish that it was recycled and not sent to landfill. No change to IQ Renew’s existing sorting, processing and recycling activities was required in order to be entitled to the CDS Refund, and participation in the CDS was voluntary. The Second Reading Speech expressly stated that MRFs would not be required to access refund amounts; however, it would require very little effort or change to existing processes to access the refund in this way.

(c)    The additional requirement imposed on IQ Renew was the administrative requirement to lodge a refund claim and to provide information in support of that claim, being information already produced and in the possession of IQ Renew. IQ Renew submits that those information requirements are not sufficient to give rise to a taxable supply by IQ Renew, being merely incidental to the payment.

(d)    No material benefit was received by EFC as the Scheme Coordinator in return for the payment of the CDS Refund. As the CDS White Paper stated, the role of the CDS was to act as a financial clearing house by collecting fees from Beverage Suppliers and using those fees to pay the CDS Refunds, being what IQ Renew describes as a public law role.

109    IQ Renew thus submits that the Commissioner’s reliance on recycling Eligible Containers in a CDS-compliant way merely describes the very services that IQ Renew was already required to perform, namely operating the Facility in compliance with the Environmental Laws, regardless of whether a CDS Refund was applied for by IQ Renew. IQ Renew submits that it did not comply with the Environmental Laws and its EPA Licence “for” the CDS Refunds; rather, it did so as that was required by law, which was equally the case both before and after the commencement of the CDS.

110    As to the Commissioner’s contention that IQ Renew made a supply for consideration to the EPA (as an alternative to a supply for consideration to EFC), IQ Renew relies on the submissions set out above in relation to EFC, and submits further that the purported connection between the activities of IQ Renew and the “supply for consideration” to the EPA is unclear, relying on the following:

(a)    no agreement was entered into between IQ Renew and the EPA in the context of the CDS;

(b)    the claim for the CDS Refund was not lodged by IQ Renew with the EPA, and none of the supporting information was provided to the EPA;

(c)    IQ Renew at all times operated the Facility and the enterprise pursuant to the EPA Licence and Environmental Laws, the introduction of the CDS did not impact the EPA Licence, and no additional obligations were imposed on IQ Renew with respect to the CDS;

(d)    the CDS Refund was paid to IQ Renew by EFC in its capacity as a financial clearing house, and the Commissioner has not identified any consideration provided by the EPA that was provided for, or in order to obtain, any purported supply by IQ Renew; and

(e)    the EPA’s role is regulatory, not acquisitive.

The Commissioner’s submissions

111    The Commissioner submits that IQ Renew’s participation in the CDS, by way of performing recycling services in compliance with the CDS, in combination with entering into refund sharing arrangements with local councils, facilitating sampling procedures and cooperating with audits as a condition of submitting claims for refunds, advanced and promoted the objectives of the CDS, and IQ Renew thereby provided EFC (as Scheme Coordinator) with something of value and therefore made supplies to EFC. The Commissioner submits that advancing and promoting the objectives of the CDS included the reduction and dealing with waste generated by beverage product packaging, and the recovery, reuse, and recycling of empty beverage containers. Alternatively, the Commissioner submits that IQ Renew’s participation in the CDS in that manner advanced and promoted the objectives of the CDS, and IQ Renew thereby provided the EPA, being the authority charged with powers, functions and duties under the WARR Act, with something of value and therefore made supplies to the EPA.

112    The Commissioner submits that, when IQ Renew performed the CDS-compliant recycling services and otherwise engaged in conduct necessary to make claims for CDS Refunds, it was in effect doing what EFC (or, in the alternative, the EPA) had asked it to do, pursuant to the CDS regime in the WARR Act and the CDS Regulations, as well as under the MRF Protocol. The Commissioner submits that IQ Renew’s participation in the CDS, including by performing CDS-compliant recycling services, enabled EFC to perform its functions and comply with its various obligations under the Scheme Coordinator Agreement, and in a broader sense, it enabled EFC to perform its role as Scheme Coordinator under the WARR Act, the CDS Regulations, and the MRF Protocol. Likewise, the Commissioner submits that IQ Renew’s participation in the CDS enables the EPA to fulfil its statutory objectives and discharge its statutory functions.

113    As to IQ Renew’s submission that it was already carrying out recycling services and complying with its public law obligations to NSW in the same manner as it did prior to the introduction of (and participation in) the CDS, the Commissioner submits that it is wrong to assume that the supplies made by IQ Renew to the EFC or the EPA as part of its participation in the CDS were entirely co-extensive with supplies made to others, and it is wrong to assume that one set of acts gives rise to only one supply, for the following reasons.

114    First, the Commissioner submits that, although there is a substantial degree of overlap between the recycling activities that IQ Renew performed as part of its participation in the CDS and its recycling activities performed in respect of its pre-existing gate fee arrangements, the various requirements under the CDS that IQ Renew needed to satisfy in its capacity as an MRF operator in order to become entitled to CDS Refunds are separate from any contractual requirements that IQ Renew needed to satisfy under agreements for its provision of recycling services to local councils. The Commissioner adds that not all of IQ Renew’s recycling activities were conducted pursuant to its contractual obligations with local councils or, in some cases, any contractual obligation at all, with reference to the affidavit of Mr Knowles at [36]. The Commissioner submits that the recycling services that IQ Renew provided to local councils were not identical to the CDS-compliant recycling services that entitled it to CDS Refunds. The Commissioner submits that IQ Renew provided recycling services to local councils in respect of a range of recyclable materials, including paper, cardboard, aluminium, steel, mixed plastics, glass and soft plastics. In contrast, the CDS Refund was available only in respect of Eligible Containers, citing the MRF Protocol at [7.3.2], [7.4], and [7.5].

115    Second, the Commissioner submits that the various requirements under the CDS that IQ Renew needed to satisfy in its capacity as an MRF operator in order to be entitled to CDS Refunds are additional to and separate from any obligations that IQ Renew was required to comply with under the Environmental Laws, or any conditions in IQ Renew’s EPA Licence.

116    Third, the Commissioner submits that, even if the Court accepts IQ Renew’s contention that it was already carrying out recycling services in the same manner as it did prior to the introduction of the CDS, that contention does not alter the fact that IQ Renew’s CDS-compliant recycling services constituted supplies to EFC and to the EPA for consideration, just as it would not have mattered in Department of Transport that a taxi cab operator was already carrying out passenger transport services in the same manner as they would otherwise have done (since taxi cabs have historically provided transport services to passengers well before the introduction of the MPTP in Victoria in 1983).

117    The Commissioner submits that IQ Renew fundamentally misunderstands the CDS in seeking to characterise the activities performed by IQ Renew to comply with the CDS as being no more than giving rise to a temporal connection between the CDS Refunds and activities under the CDS. The Commissioner submits that when IQ Renew complied with its obligations under the CDS for a given quarter and submitted its claim for a refund, it accepted a standing offer made by EFC to pay the CDS Refund provided it had complied with the requirements of the CDS, giving rise to a right to take action to enforce the payment of the CDS Refund to it, citing Australian Woollen Mills Pty Ltd v Commonwealth [1954] HCA 20; (1954) 92 CLR 424 at 455–6 (Dixon CJ, Williams, Webb, Fullagar and Kitto JJ). The Commissioner also cites the decision at first instance in Secretary to the Department of Transport (Victoria) v Federal Commissioner of Taxation [2009] FCA 1209 at [60]–[61] (Gordon J), noting that her Honour’s analysis was not disapproved by the majority of the Full Court on appeal. The Commissioner also submits that, in submitting its claim for a refund under the CDS, IQ Renew exposed itself to penalties if it submitted the claim but failed to actually recycle the Eligible Containers in compliance with the CDS.

118    As to IQ Renew’s reliance on AP Group, the Commissioner submits that in AP Group, the Full Court found that the Toyota “fleet rebates” and “run-out model support” payments were third-party consideration (in addition to the price paid by the customer) for the supply of a particular car to a customer, and were calculated based on each car sold. In contrast, the Commissioner submits that the Ford and Subaru incentive payments were not calculated by reference to the sale of a particular car, but in the case of the Ford payments on the achievement of monthly and quarterly sales targets, and in the case of the Subaru payments on the dealer ordering cars from Subaru in accordance with certain minimum and maximum parameters for qualifying periods set by Subaru. In the present case, the Commissioner submits that the CDS Refund was payable by reference to the number of containers that were recycled by IQ Renew as an MRF operator, delivered to an Australian recycling facility or consigned for transport to a recycling facility in a foreign country (reg 19(4) of the CDS Regulations; MRF Protocol at [7.1] and [7.4.c]). The Commissioner submits that the CDS Refund is closer in character to the Toyota payments described in AP Group, than the Ford or Subaru payments.

119    As to Department of Transport and TT-Line, the Commissioner submits that those cases are not distinguishable on the basis contended for by IQ Renew, namely that (according to IQ Renew’s submission) the clear inference is that the suppliers would not have behaved in the same way if the rebates were not available. The Commissioner submits that, on the facts of each of those cases, there is not a clear inference available that taxi cab operators or ferry operators respectively would not have behaved in the same way if the rebates were not available. Further, the Commissioner submits that neither Department of Transport nor TT-Line in any way suggests that the question of whether a supply is made for consideration is to be answered by reference to whether the supplier changed its activities in some way in response to an additional payment becoming available. The Commissioner thus submits that, even if IQ Renew were able to discharge its burden of proving that its activities had not changed in any way in response to the introduction of the CDS, that fact would not gainsay the existence of the connection required between supply and consideration under s 9-5(a). The Commissioner submits that s 9-5(a) of the GST Act does not pose a “before and after” test, just as it does not pose a “but for” test, citing AP Group at [35].

120    In relation to IQ Renew’s submission that the CDS Refund was a “financial assistance payment”, the Commissioner submits that, even if the CDS Refund were characterised in that way, GSTR 2012/2 contemplates that “financial assistance payments” may be consideration for a supply (citing [15] of GSTR 2012/2). Further, the Commissioner submits that GSTR 2012/2 is not binding on the Court, being merely a statement of the way in which the Commissioner considers a relevant provision applies or would apply to entities generally or a class of entities, either at large or in relation to a class of schemes or a particular scheme: s 358-5 of Sch 1 to the TAA.

121    As to the Commissioner’s alternative submission that taxable supplies were made to the EPA (rather than EFC), the Commissioner emphasises that he only seeks to impose GST once in respect of the supplies made by IQ Renew as part of its participation in the CDS. Thus, the Commissioner relies on the supplies made by IQ Renew to the EPA in connection with the CDS as being the relevant supply for consideration only if EFC as Scheme Coordinator is found to receive nothing of value for which the CDS Refund is consideration because of its role in the CDS. Further, in addition to the submissions already set out above, the Commissioner submits as follows:

(a)    s 9-5(a) of the GST Act does not require an agreement to be entered into between the supplier and the recipient of a supply, and all that is required is that IQ Renew made a supply for consideration;

(b)    under s 9-15(2) of the GST Act, it does not matter whether the payment, act or forbearance constituting consideration for a supply was by the recipient of the supply, such that a supply need not be made to the entity providing consideration, citing AP Group at [44] and also TT-Line. Thus, the Commissioner submits that the fact that EFC paid the CDS Refund to IQ Renew does not mean that a supply for consideration was not made to the EPA; and

(c)    a government entity is relevantly capable of making acquisitions for GST purposes, citing Department of Transport at [39], and that simply characterising the EPA’s role as regulatory does not gainsay that proposition.

Consideration

122    At the outset, I should state that I agree with IQ Renew’s submission that there was no material change to its collection, sorting, processing and recycling activities as a result of the implementation of the CDS. The only change which it made to its physical activities in relation to processing recyclables was to add a small access panel to an infeed conveyor to assist EFC to carry out its sampling activities, at a cost of about $30, and in circumstances where the access panel was not specifically requested by EFC. I regard that as too insignificant to amount to a material change to IQ Renew’s collection, sorting, processing and recycling activities as a result of the CDS. The lack of any material change is consistent with the intention of the CDS as expressed in the Second Reading Speech and the CDS White Paper.

123    However, in my view, the present case is not analogous to the Ford and Subaru incentive payments considered in AP Group, where there was no change in the supplier’s behaviour as a result of the prospective receipt of the relevant consideration. In the case of IQ Renew, while there was no material change in the performance of its recycling services as a result of the CDS, there were other changes in its conduct which were plainly brought about by reason of the introduction of the CDS and the consideration to be provided under the CDS. Those changes included facilitating EFC’s sampling procedures, cooperating with its auditors, and entering into refund sharing agreements with the local councils that required them. Those matters constituted something of benefit to EFC and EPA in terms of assisting them to achieve the objectives of the CDS. Although the changes to IQ Renew’s conduct were not of the same kind as the changes in Department of Transport and TT-Line (where the government rebates meant that the suppliers charged less to their customers and recovered the balance from the government), the changes made by IQ Renew were sufficiently substantial for there to be a new supply for consideration, albeit one that overlapped with IQ Renew’s supplies for consideration to local councils and other customers.

124    IQ Renew submits that the benefit of assisting EFC and EPA to achieve the objectives of the CDS is too vague to satisfy the concept of a “supply for consideration”. I reject that submission. It is clear from Department of Transport that the fact that the consideration is provided by a government entity does not mean that the supply is not subject to the GST Act, and there is no reason why, in the context of consideration provided by a government entity in order to achieve some political or policy objective, the benefit must be capable of being characterised in a commercial or pecuniary way (as Senior Counsel for IQ Renew accepted: T182.1–18).

125    Further, it would be artificial to regard the relevant supply as being confined to the things done by IQ Renew which were over and above what it was doing in any event pursuant to its contracts with local councils and its obligations under the Environmental Laws and the EPA Licence. The question of whether IQ Renew made a supply for consideration must be approached having regard to all the circumstances in their totality, rather than focussing only on each particular constituent element and asking whether each element individually was a supply for consideration, before aggregating the particular outcomes of that disaggregated analysis. The relevant supply thus includes the recycling activities which IQ Renew was undertaking in any event, and which were relevantly unchanged by the implementation of the CDS. What was previously a supply for consideration to local councils and others before the introduction of the CDS became, upon the introduction of the CDS, at least two supplies: one to the local councils or other customers, and the other to EFC and the EPA. As discussed above, there can be more than one supply in relation to a particular transaction: MBI Properties at [33]; Department of Transport at [56]. To the extent that those recycling activities involved the recycling of Eligible Containers, upon the introduction of the CDS and IQ Renew’s participation in the CDS, that work also became part of a supply to EFC and EPA for the consideration constituted by the CDS Refunds.

126    Consistently with the Commissioner’s reasoning in the Objection Decision, the appropriate characterisation of the supply for consideration to EFC and the EPA is recycling Eligible Containers in a CDS-compliant way. The fact that such a supply overlapped to a substantial extent with the supply for consideration made by IQ Renew to local councils and other customers does not affect that characterisation. In sum, IQ Renew conducted its recycling business in a way which complied with the CDS in order to obtain the CDS Refunds, irrespective of whether IQ Renew also conducted most of its activities in that way in order to earn its remuneration from other sources such as local councils.

127    I have not placed any reliance in that analysis on the element of the CDS which required IQ Renew to provide information in its application on a quarterly basis to EFC by entering data in the EFC portal in order to be paid the CDS Refunds. GSTR 2012/2 makes it clear that the mere provision of information in order to obtain a financial assistance payment is insufficient to constitute a supply for consideration (at [40]–[43]), and the Commissioner is bound by that proposition. Accordingly, the provision of information by entering data in the EFC portal in applying for CDS Refunds is not in itself a supply for consideration as set out in GSTR 2012/2, as the Commissioner acknowledged in the Objection Decision (at [24]). In the present case, however, IQ Renew does much more than merely provide the information which is required for an application for CDS Refunds. It is not necessary to decide whether GSTR 2012/2 would permit the Commissioner to take into account the provision of information by IQ Renew in applying for CDS Refunds in conjunction with the other matters on which the Commissioner relies as constituting a supply for consideration, or whether the GST Act on its proper construction permits such an approach.

128    GSTR 2012/2 and GSTR 2006/9 also state in substance that entering into non-binding agreements is not sufficient to establish a taxable supply unless there is something else of benefit passing between the parties. It is common ground that there is no anterior contractual obligation on IQ Renew to participate in the CDS. There may or may not be a unilateral contract formed once IQ Renew makes the relevant supply and satisfies the eligibility criteria, whereby EFC may become bound to pay the CDS Refunds, along the lines suggested by Gordon J at first instance in Department of Transport: [2009] FCA 1209 at [60]–[61]. It is not necessary to resolve that question. In my view, the present case is one where something of benefit is in fact provided by IQ Renew to EFC and EPA within the meaning of GSTR 2012/2 at [56] and GSTR 2006/9 at [123], by way of assisting EFC and the EPA to achieve the objects and requirements of the CDS.

129    IQ Renew made a number of submissions as to why the refund sharing agreements were not in themselves a supply for consideration. As stated above, I do not regard it as appropriate to isolate and analyse separately the individual elements of the matters supplied by IQ Renew, but in any event I would not accept IQ Renew’s submissions in relation to the refund sharing agreements even if I were to do so. First, IQ Renew submitted that the refund sharing agreements are “downstream” of any supply, in that IQ Renew pays the local councils their share of the CDS Refunds after IQ Renew has received the CDS Refunds from EFC (T24.7–19, 104.15–23). While I accept that the performance of the refund sharing agreements by IQ Renew paying the councils their agreed share is made after IQ Renew receives the relevant amounts from EFC, reg 18(2)(b) of the CDS Regulations is concerned with local councils being satisfied with the content of the refund sharing agreements as entered into, rather than with their performance. The activity contemplated by that provision is that IQ Renew will enter into a refund sharing agreement where required to do so by the local council, on terms which the local council considers are fair and reasonable. That is part of the supply for consideration to EFC and the EPA which is contemplated by the CDS.

130    IQ Renew also submits that the language of reg 18(2) is expressed in terms of interactions between local councils and the EPA, rather than involving IQ Renew (T107.45–46). It is true that reg 18(2) requires certain notifications by local councils to the EPA. However, where the notification concerns an agreement having been entered into between the local council and the MRF operator, as it does in reg 18(2)(a)(ii) and (b), it is unrealistic to suggest that the regulation did not contemplate any activity by the MRF operator. The submission is, in my view, formalistic (as Senior Counsel for IQ Renew came very close to acknowledging: T107.46; 185.6–22), and pays no regard to the substantive reality of what is contemplated.

131    IQ Renew also submits that the refund sharing agreements made by IQ Renew were entered into before the relevant tax period, and IQ Renew then merely maintained its status as required by reg 18(2) without any further activity on its part (T109.33–111.10). However, the question of the tax period to which a taxable supply is attributable is dealt with by Div 29 of the GST Act, and depends broadly on when the consideration is received for the supply or, in some circumstances, when an invoice is issued relating to the supply: see s 29-5. The attribution rules do not depend on when the supply was made.

132    Accordingly, I accept the Commissioner’s submission that IQ Renew made a supply for consideration to EFC and the EPA by recycling Eligible Containers in a CDS-compliant way.

Has Excess GST been passed on by IQ Renew?

133    It follows from my conclusion that IQ Renew made a supply for consideration that IQ Renew has not paid any Excess GST. Accordingly, this question does not arise.

Conclusion

134    Accordingly, the appeal should be dismissed.

135    The parties seek the opportunity to address the question of costs after receiving this judgment. Accordingly, I have set a timetable for the filing and service of affidavits and written submissions on the question of costs. It is conceivable that an application will be made for a special costs order (such as lump sum costs), and if so, the evidence should deal with the quantification of any such order so as to avoid the need to refer that question to a Registrar. I anticipate dealing with the question of costs on the papers, including the quantification of any lump sum order.

Associate:

Dated:    22 September 2026