Banktech Group Pty Ltd v FC of T
Members:R Olding SM
Tribunal:
Administrative Appeals Tribunal, Sydney
MEDIA NEUTRAL CITATION:
[2023] AATA 3850
ATC 11684
R Olding (Senior Member):WHAT IS THIS CASE ABOUT?
1. This case is about the GST treatment of fees charged to patrons making cash withdrawals involving the use of cash dispensing equipment located in hotels and clubs.
2. The equipment has some of the features of the familiar automatic teller machines or ATMs found outside banks and shopping centres. The patron inserts a card, and keys in a PIN, as prerequisites to the equipment dispensing bank notes. However, unlike conventional ATMs, access to the cash-dispensing service requires intervention by staff at the venue. This is to satisfy legislation, first introduced in Victoria and followed in various forms in other states and territories, aimed at addressing problem gambling. Additionally, operation of the equipment requires a separate device - an EFTPOS terminal or remote control device.
3. The applicant says the fees are consideration for input taxed financial supplies under s 40-5.09(5)(a) of the A New Tax System (Goods and Services Tax) Regulations 2019 (Cth) (" GST Regulations "). The Commissioner denies that provision applies. If the Commissioner is correct, the parties agree the supplies are taxable supplies.
A NOTE ON TERMINOLOGY
4. The applicant is the representative member of a GST group of which Banktech Australia Pty Ltd is a member. Banktech Australia Pty Ltd instals the equipment at venues and is the recipient of the fees. In GST parlance, Banktech Australia Pty Ltd is the supplier of the thing supplied to the patrons.
5. I used the (I trust) neutral expression "cash dispensing equipment" in the brief summary above deliberately because the central controversy is whether the supplies meet the description of an automatic teller machine service being a withdrawal from an account.
6. With those considerations in mind, I adopt the following abbreviations in these reasons:
- (a) " the applicant " - to refer to Banktech Group Pty Ltd;
- (b) " Banktech " - to refer to Banktech Australia Pty Ltd;
- (c) " a conventional ATM " - to refer to the familiar type of automatic teller machine commonly found outside banks and shopping centres and able to be operated by account holders without bank staff (or any other person) providing assistance or granting access when a withdrawal or other service is required;
- (d) " the Equipment " - to refer to the various iterations of the cash dispensing equipment and associated items used to make the supplies that are before the Tribunal for review;
- (e) " the Fee " or " the Fees " - to refer to the fees charged by Banktech to patrons making cash withdrawals using the Equipment;
- (f) " the Supply " or " the Supplies " - to refer to the supply or supplies of the thing supplied by Banktech to the patrons for which the Fees are charged.
DECISION UNDER REVIEW
7. The decision under review is the Commissioner's decision disallowing the applicant's objection against a deemed assessment of its net amount for the December 2020 quarterly tax period which included GST on the Fees.
ISSUES FOR DETERMINATION
8. The ultimate issue for determination by the Tribunal is whether the applicant has discharged the burden of proving the assessment for the December 2020 tax period is excessive: Taxation Administration Act 1953 (Cth), s 14ZZK.
9. However, the parties agreed the case would be conducted on the basis that if the Tribunal concludes:
- (a) the Supplies are taxable supplies - the decision under review should be affirmed;
- (b) the Supplies are input taxed - the decision should be set aside and remitted to the Commissioner (so that the Commissioner may review input tax credits claimed by the applicant which have not been audited).
10. The Tribunal's task is therefore to determine whether the applicant has proved the Supplies are input taxed under s 40-5.09(5)(a).
Section 40-5.09(5)
11. Section 40-5.09(5) states:
A supply by an entity for a fee of not more than $1,000 is a financial supply if it is a
ATC 11685
supply of one or more of the following ATM services:
- (a) a withdrawal from an account;
- (b) a deposit into an account;
- (c) an electronic transfer from an account;
- (d) advice of the balance of an account.
- (Emphasis added.)
12. I have bolded paragraph 40-5.09(5)(a) because only that paragraph is directly relevant to this case. The Equipment is not and cannot be used to make deposits or electronic transfers or to provide account balances.
13. "ATM" is defined in s 196.1.01 of the GST Regulations as "automatic teller machine". The Fees are, of course, well under the $1,000 limit. Thus, the issue for determination is whether the Fees are consideration for a supply of the automatic teller machine service withdrawal from an account.
14. That in turn raises two issues:
- (a) the
construction issue
: What is the correct construction of s 40-5.09(5)(a)? In particular:
- (i) whether "automatic teller machine service" is merely descriptive of the list of supplies that follow; and
- (ii) if not, whether the expression has a specialist, technical or trade meaning[1]
To avoid unnecessary clutter, I use the expression “ or takes its ordinary meaning; andtechnical meaning ” to refer to a specialist, technical or trade meaning.
- (b) the characterisation issue : Do the Supplies fall within s 40-5.09(5)(a), properly construed?
15. These issues will be more readily understood by reference to the parties' submissions. The submissions are summarised below and then discussed in greater detail against the backdrop of the statutory context, evidence and other matters.
THE PARTIES' SUBMISSIONS IN SUMMARY
Applicant's submissions
16. The applicant submits that:
- (a) Section 40-5.09(5) does not require that a withdrawal from an account is also an ATM service. That is to say, the expression "ATM services", or more accurately - once the definition of ATM is inserted in its place - "automatic teller machine services" in s 40-5.09(5) is descriptive but not prescriptive of the types of services that are financial supplies. In other words, it is sufficient if the Fee is for a service that enables a consumer to make a withdrawal from an account.
- (b) If (a) is not accepted, "automatic teller machine services" takes its ordinary English meaning rather than a technical meaning. The ordinary meaning is "a service from a machine offering basic banking facilities to a cardholder inserting their card and PIN or a machine electronic device capable of automatically dispensing cash in response to a cash withdrawal transaction initiated by a cardholder." The Equipment, the applicant says, falls within that definition.
- (c) Alternatively, if automatic teller machine services has a technical meaning, it is a service provided through an electronic device capable of automatically dispensing cash in response to a cash withdrawal transaction initiated by a cardholder.
The Commissioner's submissions
17. The Commissioner submits that:
- (a) Automatic teller machine services, construed in context, takes a technical meaning reflecting the definition of an ATM in the Issuers and Acquirers Community (" IAC ") Framework and Code Sets administered by AusPayNet, (explained below).
- (b) Alternatively, the requirement for intervention by venue staff distinguishes the Equipment from the ordinary meaning of an ATM.
18. A feature at the heart of the Commissioner's primary case is the Equipment's use of the EFTPOS, rather than the ATM, payment system, as described further below. The Commissioner says the Equipment is not an ATM because it does not use the payment system designated by the Reserve Bank as the ATM system.
19. This summary of the parties' submission is deceptively simple. The case in fact involved a Tribunal book comprising some eighteen volumes; many hours of detailed reference to the history and regulation of ATMs and EFTPOS; the technical nature of those systems; the features of the Equipment which, as will be seen, came in several iterations; the steps required for patrons to access the
ATC 11686
Supplies through the Equipment; expert reports and other evidence from seven witnesses; and lengthy written opening and closing submissions, supplemented by helpful oral submissions from the parties' counsel.20. The parties helpfully produced an agreed chronology of legislative and industry developments which appears as Appendix 1 to these reasons. Where the applicant would qualify the Commissioner's description of an event, the applicant's explanation appears in the final column of Appendix 1.
SUMMARY OF TRIBUNAL'S CONCLUSIONS
21. In summary, I have concluded as follows:
- (a) Does s 40-5.09(5) require that a withdrawal is also an ATM service (as the applicant submits)?
Yes, mainly because the applicant's construction would:
- (i) leave "ATM services" in s 40-5.09(5) with no work to do; and
- (ii) mean that services such as an electronic transfer from an account or advice of an account balance would be covered by s 40-5.09(5) even if there was no ATM or even a bank account involved.
-
(b) Is the supply of an automatic teller machine service of a withdrawal from an account that is input taxed by s 40-5.09(5) limited to services provided through the ATM payment system designated by the Reserve Bank of Australia
("RBA")
and in accordance with the definition in the IAC code set (as the Commissioner submits)?
No , mainly because:
- (i) A prescriptive definition of ATM services could have been adopted when the predecessor to s 40-5.09(5) was enacted in 2009, or when the definition of ATM was introduced in 2019, but neither of those obvious drafting techniques to achieve such an intention was adopted.
- (ii) The Commissioner's construction would attribute to the drafter the unlikely intention that the expression "automatic teller machine services" would have a meaning determined from time to time by the chief executive of an industry-based self-regulatory body, not subject to parliamentary scrutiny.
-
(c) Do the applicant's Supplies fall within the ordinary meaning of an automatic teller machine service (as the applicant submits)?
No , mainly because each of the iterations of the Equipment:
- (i) requires involvement of venue staff, contrary to the "automatic" dimension that is fundamental to an ATM;
- (ii) involves the use of multiple devices, in one iteration located up to 25 metres apart, contrary to the common understanding that an ATM is operated as a single unit;
- (iii) is not marketed as an ATM.
- (d)
Does automatic teller machine service take a technical meaning that is a service provided through an electronic device capable of automatically dispensing cash in response to a cash withdrawal transaction initiated by a cardholder (as the applicant alternatively submits)?
No , because:
- (i) the evidence does not establish that there is a technical meaning for automatic teller machine service;
- (ii) in particular, the evidence does not establish that there is a technical meaning of automatic teller machine service that would include the service of obtaining a cash withdrawal from equipment with the sole functionality of dispensing cash and where staff intervention is required to access the service.
THE EVIDENCE
22. The Tribunal had the benefit of oral testimony from six witnesses as noted below. Each of these witnesses impressed me as doing their best to provide honest evidence to assist the Tribunal. Except where identified as opinion evidence, I accept their evidence as set out below. I also record the
ATC 11687
Tribunal's particular gratitude for the assistance of Mr Mamo who has no interest in the outcome of the proceedings and was suffering from COVID-19 when he gave evidence and submitted to cross examination.
The applicant's evidence
23. The applicant's evidence was provided by four witnesses who provided affidavits and (apart from Mr Castle) were cross-examined:
- (a) Mr Peter Blackett;
- (b) Mr Timothy Robert Castle;
- (c) Mr Raymond Mamo; and
- (d) Mr Mangala Martinus.
Evidence of Mr Blackett
24. Mr Blackett gave evidence on behalf of the applicant in which he:
- (a) described the conventional ATMs provided by Banktech, branded as "CashConnect ATMs";
- (b) recounted how the Victorian problem gambling laws prohibited venues from hosting an automatic teller machine unless approved by the regulator;
- (c) recounted how, in response to those laws, Banktech developed and marketed the Equipment, branded and marketed under the name "POSConnect" as EFTPOS cash out facilities;
- (d) confirmed that he did not regard the POSConnect solution as an ATM for the purposes of the problem gambling laws;
- (e) described the iterations of the Equipment;
- (f) confirmed that no POSConnect terminal could be used without involvement of a venue staff member;
- (g) confirmed that in some instances patrons would have to walk to another location in the venue, up to 25 metres away from where they engaged with the venue staff member, to access the funds they sought to withdraw.
25. Mr Blackett also provided a second affidavit in which he:
- (a) provided, in tabular form, extensive comparisons of Banktech's conventional ATMs and the three iterations of the Equipment, under the headings: Key Agreement Terms; Transaction Flow; Functions & Components; Machine Location; Supply of terminals to venues; and Technical steps in supply of cash withdrawal;
- (b) stated that from Banktech's perspective the services provided through its conventional ATMs and the Equipment are both characterised as cash out services; and
- (c) described how processing of transactions through either type of equipment is subcontracted by Banktech to its associated entity, EFTEX Pty Ltd.
26. The tables referenced at (a) above, looked at globally, present a picture of, and indeed I accept that there are, substantial similarities in function, processes and commercial terms between Banktech's conventional ATMs and the Equipment.
27. In one respect, the picture may be regarded as misleading by omission. That is under the heading Machine Location, which notes that the conventional ATMs and the Equipment are all located at a "Prominent location within venue" and "Not within a gaming room". I accept that is accurate but it fails to note that the devices used to activate the Equipment and input withdrawal amounts may be located a considerable distance from the cash out terminal - up to 25 metres in some cases as noted above. However, Mr Blackett readily acknowledged this in cross-examination.
Evidence of Mr Castle
28. Mr Castle is Banktech's solicitor. He provided detailed but uncontroversial evidence regarding ATM regulatory and related matters.
Evidence of Mr Mamo
29. Mr Mamo is the operations manager for a club that hosts Equipment provided by Banktech. He provided evidence regarding the club's use of Banktech ATMs before the problem gambling laws and described the iterations of the Equipment used by the club and the steps taken by patrons and club staff when a patron required a withdrawal. This evidence informs the description of the Equipment below.
Evidence of Mr Martinus
30. Mr Martinus has a long history in the payments industry.
31. Since 2013, he has been managing director of Payments Consulting Network
ATC 11688
which Chairs the Australian ATM Round Table. The Round Table includes representatives of the major banks and independent ATM deployers. It gathers and collates data from members.32. Without endorsing the labels adopted, I note Mr Martinus describes the data gathering in these terms:
The forum involves gathering extensive data on the ATM networks of members but does not collate data on their EFTPOS networks.
33. Payments Consulting Network defines ATM and ATM Transactions in a way that Mr Martinus says would include the Equipment.
The Commissioner's evidence
34. The Commissioner's evidence was provided by three witnesses who provided affidavits and reports and were cross-examined:
- (a) Dr Anthony John Richards;
- (b) Mr Michael Swannell;
- (c) Mr Rodney Tweddle.
Evidence of Dr Richards
35. Dr Richards' long experience includes almost 20 years in senior roles at the RBA, including as Head of the Payments Policy Department.
36. Dr Richards provided detailed evidence regarding the RBA's designation of the ATM payment system; the ATM Access Regime; and direct charging, surcharges and interchange fees.
Evidence of Mr Swannell
37. Mr Swannell is the Managing Director of KeyOne Consulting Pty Ltd. He has 20 years' experience in the payments industry, including numerous consulting engagements for banks; industry board and committee experience, including as a member of the IAC Sanctions Tribunal; and numerous regulatory consultations, and has published articles regarding payments compliance issues.
38. Mr Swannell's report:
- (a) described the ATM and EFTPOS payment systems and fee arrangements in detail;
- (b) opined that there is a specialised trade and technical meaning of "automatic teller machine" in Australia, being a device that:[2]
Expert Report of Michael Swannell dated 24 February 2023, [79]. - a. Dispenses cash in response to a cash withdrawal transaction;
- b. Provides a balance inquiry function;
- c. Has been evaluated and received an Attestation of Compliance ( AOC ) from an Approved Evaluation Facility (this requirement has been in place for the period 2008-31 December 2020);
- d. Has been approved by AusPayNet based on the AOC for deployment within the ATM network, and a letter of approval issued to the applicant (this requirement has been in place for the period 2008-31 December 2020);
- e. Is listed on the AusPayNet approved devices list (the list of devices has been available on the AusPayNet and previously the APCA website during the period 2008-31 December 2020); and
- f. Can optionally provide other functions (for example cash and cheque deposit, mini statement, and transfer of funds from one account to another.
- (c) referenced the CECS Manual/IAC definition of an "ATM" - reproduced at paragraph 72 below - and opined that that definition "is commonly accepted in the payments industry".
- (d) opined that:
There is a trade meaning of an ATM withdrawal from an account, which is the provision of cash by an ATM through the initiation of an ATM withdrawal transaction.
- (e) stated that:
- (i) an "on us" transaction, where the ATM owner and the card issuer are the same financial institution, does not route through the ATM network and is sent directly from the ATM to the financial institution's processing systems for approval or decline; but
- (ii) if the ATM acquirer is different from the card issuer, the transaction is cleared through the ATM network; but
- (iii) a substantial number of ATM transactions are routed through the eftpos Hub centralised payment system, but opined that the routing process does not
ATC 11689
determine whether a transaction is an EFTPOS or ATM transaction;
- (f) identified that the same financial message standard applied for ATM and EFTPOS transactions, but the message formats were different, which he opined had some implications for the customer experience;
- (g) set out the steps required to withdraw cash from each iteration of the Equipment which he observed at venues;
- (h) opined that a withdrawal via an ATM differs from a withdrawal via the Equipment because, among other reasons he stated, an ATM withdrawal is a fully automated process whereas a withdrawal using the Equipment includes manual steps performed by a staff member; noting in particular:
- (i) transaction initiation - for an ATM withdrawal is always by the cardholder whereas withdrawal via the Equipment must be initiated by a staff member [at the patron's request];
- (ii) withdrawal amount - the cardholder always enters the amount for an ATM withdrawal while a withdrawal through the Equipment requires a staff member to enter the withdrawal amount via a remote control or EFTPOS terminal;
- (i) provided review comments in relation to Mr Martinus' report; in particular:
- (i) agreeing that there is no trade term for "ATM service"; and
- (ii) opining that a withdrawal transaction using the Equipment is not automated like an ATM transaction and is not an ATM withdrawal transaction.
Evidence of Mr Tweddle
39. Mr Tweddle has over 30 years' experience in the payments industry, including as executive manager of eftpos Payments Australia Limited (" EPAL ") - which was formed in 2009 "to provide focussed management for EPAL's payment system" - from 2012 to 2017.
40. Mr Tweddle provided evidence regarding the development of the eftpos Hub and the routing of ATM transactions. He opined that transactions processed using the Equipment are considered EFTPOS transactions and not ATM transactions by EPAL, the RBA and card issuers.
THE TEXTUAL CONTEXT OF S 40-5.09(5) IN THE GST LEGISLATION
41. The applicant's primary argument, in particular, draws upon the textual context of other provisions in the GST Regulations concerning financial supplies in relation to the construction of s 40-5.09(5). The legislative framework in which s 40-5.09(5) sits is summarised below.
42. The statutory architecture for identifying input taxed financial supplies, contained in the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (" GST Act "), is as follows:
- (a) GST is payable on taxable supplies.[3]
GST Act, s 7-1. - (b) Supplies that are input taxed are not taxable supplies.[4]
GST Act, s 9-5. - (c) A "financial supply" is input taxed.[5]
GST Act, s 40-5. - (d) Financial supply has the meaning given by the GST Regulations.
43. Under the GST Regulations, so far as relevant for current purposes a supply is a financial supply if it is a financial supply under s 40-5.09 of the regulations and not excluded by s 40-5.12. There is no suggestion that s 40-5.12 could apply to exclude the Supplies from being input taxed financial supplies.
44. Section 40-5.09 relevantly states:
What supplies are financial supplies
- (1) The provision, acquisition or disposal of an interest mentioned in subsection (3) is a financial supply if:
- (a) the provision, acquisition or disposal is:
- (i) for consideration; and
- (ii) in the course or furtherance of an enterprise; and
- (iii) connected with the indirect tax zone; and
- (b) the supplier is:
- (i) registered or required to be registered; and
- (ii) a financial supply provider in relation to supply of the interest.
- …
ATC 11690
- (3) For the purposes of subsections (1) and (2), the interest is an interest in or under a matter mentioned in an item in the following table.
Financial supplies Item An interest in or under … 1 An account made available by an Australian ADI in the course of: (a) its banking business within the meaning of the Banking Act 1959; or (b) its State banking business - …
- (4) A supply by an Australian ADI for a fee of not more than $1,000 is a financial supply if:
- (a) item 1 of the table in subsection (3) does not apply to the supply because the recipient of the supply does not have an account with the ADI but the item would have applied to the supply if the recipient had an account with the ADI; or
- (b) the fee relates to an application to the ADI that, if accepted, would result in the creation of an account by the ADI.
Example 1: For paragraph (a), electronic transfer to another Australian ADI for a person who does not hold an account with the ADI.
Example 2: For paragraph (b), a loan application fee.
- (5) A supply by an entity for a fee of not more than $1,000 is a financial supply if it is a supply of one or more of the following ATM services:
- (a) a withdrawal from an account;
- (b) a deposit into an account;
- (c) an electronic transfer from an account;
- (d) advice of the balance of an account.
- …
45. An "
Australian ADI
" is an authorised deposit-taking institution which, broadly, means a body corporate authorised to carry on banking business in Australia.[6]
46. Schedule 2 to the GST Regulations sets out examples of supplies that relate to matters mentioned in the table in s 40-5.09(3). Schedule 3 sets out examples of supplies excluded by s 40-5.12. In both cases, if there is inconsistency between the provision and an example, the provision prevails.[7]
LEGISLATIVE HISTORY
47. The former regulation 40-5.09(4A), which was replicated in identical terms as the current s 40-5.09(5) of the GST Regulations, was introduced in 2009. It came into effect on 3 March 2009.
48. Before the 3 March 2009 insertion of the former regulation 40-5.09(4A), fees charged to account holders by an ADI for ATM services were treated as consideration for input taxed supplies, but if fees were charged by a non-ADI ATM provider for identical services they would have been subject to GST.
49. The 2009 amendment removed this anomaly by ensuring all ATM services falling within the former regulation 40-5.09(4A) would be input taxed. That is to say, they would be input taxed whether the services were provided by an ADI or a non-ADI.
50. A further change occurred in 2019 when the definition of "ATM" as "automatic teller machine" was introduced.
POLICY CONSIDERATIONS AND GST TREATMENT OF CASH WITHDRAWALS
51. The 3 March 2009 effective date for the new regulation 40-5.09(4A) is significant. That is the date on which the RBA ATM Access Regime and ATM Access Code came into effect.
52. The Explanatory Statement to the amending regulation confirms that alignment in timing is not coincidental. The introduction of the former regulation 40-5.09(4A) was timed to coincide with the introduction of the ATM Access Regime.
53.
ATC 11691
As the Explanatory Statement put it:The purpose of the amending Regulations is to amend the A New Tax System (Goods and Services Tax) Regulations 1999 (the Principal Regulations) to define the supply of certain automatic teller machine (ATM) services as a 'financial supply'. This ensures that no GST is charged on those ATM transactions.
…
Prior to 3 March 2009, consumers were only charged indirectly for ATM services, through increased bank account charges. However, the Reserve Bank of Australia has introduced rules permitting ATM providers to charge users directly when they make use of the providers' ATMs from this date. It is expected that individuals using ATMs not operated by their account provider will be charged.
Without the amending Regulations, the GST treatment of supplies of ATM services for which users were directly charged would have differed depending on whether or not the ATM provider was an Authorised Deposit-taking Institution (ADI). If the ATM provider was an ADI, such as a bank or credit union, and the service was provided as part of the supply of a bank account to their own customer, the supply would an input taxed financial supply as the supply of an interest in or under a bank account (sub-regulation 40-5.09(3) of the Principal Regulations).
Similarly, if the ATM provider was an ADI, but the service was not provided in
relation to an account with that ADI, the supply would still be input taxed as subregulation 40-5.09(4) of the Principal Regulations provides, amongst other things, that supplies by an ADI (for consideration of less than $1000) that would have been financial supplies if supplied in relation to an account with the ADI are financial supplies.
However, if the ATM provider was not an ADI, for example a business whose sole activity was providing and maintaining ATMs, neither sub-regulation could apply and the supply would have been taxable.
The amending Regulations addressed this anomaly by inserting new sub-regulation 40-5.09(4A) into the Principal Regulations, making supplies of specified ATM services for consideration of not more than $1000 input taxed financial supplies. This ensures that supplies of ATM services made by non-ADIs receive the same GST treatment that already applies to supplies made by ADIs.
(Emphasis added.)
54. Thus, it is clear that, once non-ADIs were permitted to charge fees for cash withdrawals through ATMs from 3 March 2009, those fees were to be input taxed in the same way as fees charged by ADIs for ATM withdrawals (and other specified ATM services).
55. The upshot of these changes is that, following the 2009 amendment, fees charged for cash withdrawals from bank accounts have been consideration for an input taxed supply, whether the fee is charged:
- (a) by an ADI for a withdrawal from the account holder's account undertaken in a branch of the ADI with the assistance of a teller; or
- (b) by an ADI for a withdrawal from the customer's account through an ATM operated by the ADI; or
- (c) by an ADI for a withdrawal through an ATM operated by the ADI from an account with another ADI; or
- (d) by a non-ADI provider for a withdrawal through an ATM operated by that provider.
56. Thus, there is parity of treatment for withdrawal fees (and fees for other specified services) whether the customer is withdrawing cash at their bank; at an ATM operated by their bank; at an ATM operated by another bank; or at an ATM operated by an ATM provider that is not a bank. It is clear the 2009 amendment was designed to achieve parity between charges for withdrawals and other specified automatic teller machine services conducted through ATMs operated by ADIs and non-ADIs. But that begs the question: what is an automatic teller machine service for the purposes of s 40-5.09(5)?
ATC 11692
The applicant's submissions
57. The applicant's argument - that the term "ATM services" in s 40-5.09(5) is merely descriptive of, and given meaning by, the four listed services that follow - is partly based upon comparison of the structure of s 40-5.09(5) with the structure of s 40-5.09(1) and 40-5.09(4).
58. Those provisions, set out at paragraph 44 above, specify that a particular activity is a financial supply "if" the specified conditions that follow are satisfied. By contrast, s 40-5.09(5) specifies that a supply "is a financial supply if it is a supply of one or more of the following ATM services" followed by the list of four services.
Conclusion: "ATM services" is not merely descriptive
59. I acknowledge the difference in the structure of s 40-5.09(5) in comparison to these two immediately surrounding submissions. I am not persuaded, though, that the difference leads to the outcome for which the applicant advocates. My difficulty in accepting the applicant's proposition is twofold.
60. The first difficulty is that precisely the same outcome could have been achieved without including the words "ATM services" in s 40-5.09(5). That is, the services specified in s 40-5.09(5)(a)-(d) would have been input taxed. The applicant's construction would leave the words "ATM services" with no work to do. That is contrary to the accepted statutory interpretation presumption that words in statutory provisions are taken to have been included deliberately and must be given meaning. The applicant has not put forward a compelling reason for departing from that presumption.
61. Secondly, the applicant's proposition would mean that services such as an electronic transfer from an account or advice of an account balance would be covered by s 40-5.09(5) even if not provided through an ATM or not even related to a bank (or other financial institution) account. That seems an unlikely intention to attribute to a drafter who chose to describe the supplies to be covered as ATM services.
ORDINARY OR TECHNICAL MEANING?
The applicable principles
62. The following summary of principles relevant to when a statutory provision may be taken to have a technical meaning rather than its ordinary meaning was endorsed in Re Collector of
Customs v Bell Basic Industries Ltd:[8]
- (i) With respect to revenue laws directed to commerce, courts are more ready to conclude that items have been described according to common commercial or trade usage rather than in their natural or ordinary sense.
- (ii) Whether there is a common commercial or trade usage in relation to a particular item is a fact to be proved by evidence.
- (iii) The evidence properly admissible is as to what merchants and others did, at the date of the Act, in fact call such articles … Evidence is also admissible to ascertain what, according to mercantile understanding, are the characteristics connoted by the descriptive names referred to in the legislation.
- (iv) But how the trade describes goods is not conclusive. Trade evidence may limit the meaning of an expression to the denotation which it has at a particular time without making allowance for its capacity to extend to new exemplifications which have the characteristics of accepted denotations:
- (v) Equally, if particular articles were, at the date of the Act, unknown, or not known by that name, merchants cannot, by merely appropriating a particular tariff designation and attaching that designation to an article, bring it into the country under that name unless it is in truth such an article.
- (vi) It may be less difficult to establish a trade meaning which extends the ordinary meaning of an expression than one which limits the ordinary meaning in a specialized way.
- (vii) If the expression is not uniformly understood in a specialized sense in the trade, it cannot be assumed that Parliament has adopted or recognized that specialized meaning. In that event; the ordinary English meaning of the expression is applied, having regard to the legislative context;
ATC 11693
- (viii) If there is a common, commercial or specialized meaning of the particular item established by evidence, it is necessary to determine whether the legislation has used the word in its ordinary signification or in the special sense …
- [References omitted.]
63. None of these principles is determinative. Nor are they immutable: I accept the Commissioner's submission that the principle that it may be less difficult to establish a trade meaning which would extend an ordinary meaning (subparagraph (vi) above) does not mean a provision could never be construed as adopting a technical meaning that is narrower than the ordinary meaning.
Payment industry history and regulatory context
64. To understand the Commissioner's submissions, it is necessary to set out some historical background to the payments industry and regulatory framework. I understand the following summary to be uncontroversial. As mentioned above, a chronology of key developments appears in Appendix 1.
Historical development of ATM services and regulation
65. ATMs first entered the Australian market in the late 1970s. At that time, ATMs were linked only to the computer network of the financial institution that owned and branded the machine. A consumer could only use an ATM supplied by their own bank.
66. In time, technology and the market evolved to allow interoperability of ATMs such that most ATM cards can now be used at any ATM regardless of which bank or other entity owns the ATM. This required a payment system to facilitate transfers of funds from customer's accounts and between financial institutions.
67. Prior to the 2009 reforms, interchange fees were charged between participant entities when a cardholder used an ATM not operated by their financial institution - known in the industry as " foreign transactions " (in contrast to " on us " transactions involving only the customer's own bank and for which fees generally have not been charged). The financial institution paying the interchange fee would pass this cost onto the customer by way of a fee which could also include a markup. These fees were not disclosed at the time the customer undertook the ATM transaction but would subsequently appear in their bank statements.
68. The RBA had concerns about the lack of transparency and inflexibility of the system of interchange fees that had evolved and the impact on competition. The 2009 reforms were designed to make the cost of cash withdrawals more transparent and help promote the widespread availability of ATMs and competition between financial institutions and by making access easier for new non-ADI entrants.
69. One way that was achieved was to prohibit the charging of interchange fees (other than in certain limited circumstances). The industry responded by moving to explicit upfront direct charging for ATM services disclosed before the customer confirmed the withdrawal or other transaction.
70. The first step in achieving this change was for the RBA to "designate" the ATM payment system under s 11(1) of the Payment Systems (Regulation) Act 1998 (Cth) which allowed the RBA to exercise certain regulatory powers under s 10 of that Act. The designation described the ATM system as:
a funds transfer system utilising automatic teller machines and governed by the rules set out in the CECS manual for the Consumer Electronic Clearing System ( CECS manual ), complemented, supplemented and/or modified by contracts, arrangements or understandings between individual issuers, acquirers, deployers and switches in the system. This system allows cardholders to use an ATM card to withdraw cash or obtain other services from automatic teller machines.
71. The CECS manual was published in December 2000 by Australian Payments Clearing Association Limited (" APCA "), an entity established by banks and other financial institutions in 1992 to oversee payments clearing processes in Australia and set standards to be adopted by ATM acquirers. CECS members included the big four banks and other major banks.
72.
ATC 11694
The CECS manual defined "ATM" as:an approved electronic device capable of automatically dispensing Cash in response to a Cash withdrawal Transaction initiated by a Cardholder. Other Transactions (initiated by a debit card) such as funds transfers, deposits and balance enquiries may also be supported. The device must accept either magnetic stripe Cards or smart (chip) Cards where Transactions are initiated by the Cardholder keying in a Personal Identification Number (PIN). Limited service devices (known as "Cash dispensers") that only allow for Cash withdrawals are included.
73. Designation of the ATM system in this way did not, in itself, achieve the reforms. However, it allowed the RBA to promulgate, pursuant to s 12 of the Payment Systems (Regulation) Act 1998, the ATM Access Regime with effect from 3 March 2009. It was the ATM Access Regime that prohibited (most) interchange fees, thus encouraging more transparent direct fees charged upfront to cardholders.
74. The CECS manual was replaced, on 1 July 2015, by the Issuers and Acquirers Community Framework Regulations and Codes Sets. The IAC Code Sets contain regulations for the approval of devices as ATMs and adopt the definition of ATM formerly found in the CECS manual, as extracted above. These documents are administered by APCA which, by then, was known as AusPayNet .
75. Thus, as the Commissioner's witness, Dr Richards, summed it up:
[T]he ATM system is governed by cooperative, self-regulatory arrangements under the auspices of the Australian Payments Network.
Regulation of the EFTPOS system
76. There is a longstanding distinction between the ATM network and the EFTPOS network. The RBA designated the EFTPOS network as a payment system in 2004, and in 2006 released an EFTPOS Access Regime and Code. A further designation of the EFTPOS system as a payment system occurred in 2012. The EFTPOS System was defined as
the electronic funds transfer system governed by the EFTPOS Scheme Rules promulgated under the constitution of EFTPOS Payments Australia Limited …
77. In September 2014, EPAL established the "eftpos Hub" as a centralised payment system. The following year, the RBA revoked the EFTPOS designation as it was considered unnecessary following the establishment of the eftpos Hub.
What is the technical meaning of automatic teller machine services according to the Commissioner?
78. The Commissioner says that "automatic teller machine", used adjectivally in s 40-5.09(5), takes a technical meaning that:
- (a) refers to a machine used in the payment system designated by the RBA as the ATM payment system;
- (b) is given meaning according to the definition in the IAC Framework and Code Sets (formerly the CECS Manual) as set out above; and
- (c) does not include facilities, machines or devices used to access other payment systems and specifically not the EFTPOS payment system.[9]
Respondent’s Outline of Opening Submissions dated 22 May 2023, [132] e.
79. It is common ground that the ATM and EFTPOS networks are separate networks and that the Equipment uses the EFTPOS network and not the ATM network.
80. It is also clear the 2009 RBA reforms were the catalyst for the 2009 amendment to the GST Regulations introducing the predecessor to s 40-5.09(5). The Commissioner says this is a powerful contextual indicator that the provision should be construed to confine ATM services to those provided through the ATM network and to not include services provided through the EFTPOS system. In addition to the timing of the amendments and the longstanding distinction between the EFTPOS and ATM networks, the Commissioner points to the correlation between the services listed in s 40-5.09(5) and those set out in the CECS manual definition of ATM.
81. The Commissioner also relies on the evidence of Mr Swannell who opined there is a technical meaning of automatic teller machine. According to Mr Swannell, that specialised
ATC 11695
meaning requires, amongst other things, that the device has been evaluated and an Attestation of Compliance issued for deployment of the device within the ATM network, and that it is listed on the AusPayNet approved devices list for ATM devices.82. Further, Mr Swannell says the IAC Code Set definition of ATM, which refers to an "approved" device, is commonly accepted by the payments industry. Mr Swannell goes on to say all organisations participating in the ATM and EFTPOS systems are "bound by the IAC Code Set and therefore the definition of an ATM contained in the IAC Code Set".
Conclusion: "automatic teller machine services" is not restricted to services provided through the ATM payment system on IAC approved devices
83. Having regard to the longstanding distinction between the ATM and EFTPOS payment systems, I acknowledge the force of the Commissioner's argument that automatic teller machine services are confined, for the purposes of s 40-5.09(5), to those conducted through the ATM system and do not extend to services provided through the EFTPOS system. However, for the reasons that follow, I am not persuaded automatic teller machine services are confined for that purpose to devices approved as such under the IAC Code Sets and that devices that use the EFTPOS system are necessarily excluded. There are several reasons for this.
84. First, if it was the drafter's intention to limit ATMs to those approved under the CECS manual, the obvious course would have been to legislate that limitation when s 40-5.09(4A) was introduced.
85. Secondly, and conversely, it is an unlikely intention to attribute to the drafter that an expression should take its meaning from a document promulgated by an industry self-regulatory body. This is especially so when the expression in question, "ATM", was defined by the 2019 amendment and the industry document expressly provides that it may be amended at any time by the body's Chief Executive Officer.[10]
86. Thirdly, although not impossible, the authorities indicate a construction that limits the ordinary meaning of a term is less readily adopted than one that expands the ordinary meaning. The Commissioner's construction would not expand the ordinary meaning. It might potentially restrict the ordinary meaning, although there is no evidence of devices that would not fit the Commissioner's definition being treated as ATMs other than for the data-collection purposes of the ATM Round Table.
87. Fourthly, the Commissioner's insistence that automatic teller machine services covered by s 40-5.09(5) are limited to those provided by a machine that operates through the ATM payment system does not sit comfortably with paragraphs (b) and (c) of s 40-5.09(5) which specifically contemplate an ATM service may include "a deposit into an account" and "an electronic transfer from an account" respectively. Those "on us" services are internal to the customer's bank and do not require use of any payment system. The Commissioner's submission would have it that such deposits and transfers could only be ATM services if the machine through which they are conducted is connected to and approved for the ATM network even though that network is irrelevant to the conduct of the transactions.
88. Fifthly, it is not clear, as the cases suggest is necessary for the ordinary meaning of a term to be displaced by a technical meaning, that there is a uniformly-accepted technical meaning for automatic teller machine. The evidence of Mr Martinus suggests industry members reporting data to the ATM Round Table have been prepared to apply a broader meaning.
89. Sixthly, and relatedly, there is a divergence between Mr Swannell's evidence and the IAC Code Set definition proffered by the Commissioner as setting the limits of s 40-5.09(5). At paragraph 79.b. of his report, Mr Swannell included as one of the elements of his definition of an ATM that it is a device that provides a balance inquiry function. However, the CECS/IAC definition includes the statement: "Limited service devices (known as
ATC 11696
90. Seventhly, early versions of ATMs were, as indicated above, only capable of "on us" transactions which, like current day "on us" ATM transactions, were handled within the bank's own systems and did not engage with any payment system (ATM or EFTPOS). Such services would unquestionably have been ATM services. The Commissioner's submission implies such services ceased to be ATM services not by virtue of a change in statutory definition but by a non-government body's adoption of a definition for limited, industry self-regulatory purposes. That may be of little moment since the concept of an ATM had broadened by the time those developments occurred, but it does highlight the implications of the Commissioner's construction. It brings into focus the dangers of, in effect, transposing a potentially fluid definition developed by a non-government body for a limited purpose into a statutory provision enacted for a different purpose.
91. The Commissioner's response to that criticism is that the industry definition is accepted by those regulated by the IAC and on that basis it must be the accepted technical meaning of the term. But that assumes because the industry accepts, for self-regulatory purposes, a particular definition, that definition is the accepted meaning for other purposes. It would not surprise if an industry accepted a narrower definition for self-regulation than it might for other purposes. Indeed, the evidence of Mr Martinus suggests that is what the ATM Round Table members have done - accepted the IAC definition for regulatory purposes and a broader definition for their commercial data collecting and analysis purposes.[11]
92. For completeness, I note that much of the Commissioner's evidence was directed to differences between the ATM and EFTPOS networks and differences between devices approved as ATMs by IAC and those, such as the Equipment, that do not have that approval and operate through the EFTPOS system.
93. In at least one respect, the thrust of the Commissioner's submissions in that regard is undermined by evidence from his own witness, Dr Richards. The Commissioner drew attention to documents issued by Banktech describing the Fees as a surcharge, which is language used by some retailers and service providers to describe extra charges levied on customers paying by credit card. Dr Richards advised that these days most Australians do not pay charges when they undertake a transaction at an ATM owned by an Australian financial institution; in practice, direct charges mostly apply to transactions at ATMs owned by non-bank independent deployers. Significantly, Dr Richards went on to state that while "direct charge" is the term typically used by the RBA and within the industry, independent deployers sometimes refer to them as surcharges or operator fees. Mr Swannell confirmed that both fees - a direct charge for an ATM withdrawal service and a surcharge for an EFTPOS withdrawal service - are for the service constituted by using a device to withdraw cash, the difference being one of label.[12]
94. More significantly, the Commissioner's evidence regarding these various differences, said to distinguish machines and services that operate through the ATM network from those using the EFTPOS system, only goes to establishing that the systems are different, which the applicant accepts. They do not otherwise assist in determining whether s 40-5.09(5) should be restricted to the former. Additionally, the existence of machines commonly known as automatic teller machines pre-dated the RBA's designation of the ATM payment system and the ATM access regime.
Nor is there a technical meaning of automatic teller machine services in accordance with the applicant's alternative submission
95. The applicant's alternative submission is that automatic teller machine has a technical meaning; namely, an electronic device capable of automatically dispensing cash in response to a cash withdrawal transaction initiated by a cardholder. Inferentially, an automatic teller machine service is a service provided through such a device.
96. So far as the applicant's alternative submission relies upon the evidence of Mr Martinus, a difficulty with the submission is that Mr Martinus' report does not identify any basis, other than his own assertion, on which the statutory expression "automatic teller machine service" can be said to have a technical meaning. Rather, Mr Martinus says:[13]
ATC 11697
"ATM service", while not defined per se, in a trade sense would mean deploying an ATM that can conduct an "ATM transaction."
97. He then goes on to reference definitions of "ATM Transaction" in the RBA Access Regime for the ATM system, the IAC Code Set and the definition adopted by Payments Consulting Network for the Australian ATM Round Table.
98. There is, as Mr Martinus points out, a common theme in the IAC Code and Payments Consulting Network related definitions of ATM: an electronic device capable of automatically dispensing cash in response to a cash withdrawal transaction initiated by a customer. But there is also a significant difference: the IAC definition only applies to an approved device. Additionally, it is apparent, as discussed below, that Banktech itself does not refer to the Equipment as ATMs.
99. In the absence of evidence that there is a foundation for the view that the statutory expression "automatic teller machine service" has the technical meaning advanced in the alternative by the applicant, or that such meaning is uniformly accepted, I am of the view that the expression takes its ordinary meaning for the purposes of s 40-5.09(5).
IS THE SERVICE PROVIDED THOUGH ANY OF THE ITERATIONS OF THE EQUIPMENT WITHIN THE ORDINARY MEANING OF AN AUTOMATIC TELLER MACHINE SERVICE OF WITHDRAWAL FROM AN ACCOUNT?
100. To explain my reasoning in respect of this question, it is necessary to describe the various versions of the Equipment and the service provided by the applicant in more detail.
POSConnect Cash Out Terminal services
101. This first generation of the Equipment involved retrofitting Banktech's CashConnect ATMs by:
- (a) removing the keypad through which the customer would input their PIN and their withdrawal amount; and
- (b) relocating that function to a "behind the bar" EFTPOS terminal.
102. A withdrawal involved the following steps:
- (a) patron approaches a venue staff member and asks to withdraw a specified amount;
- (b) staff member enables the cash out terminal;
- (c) patron inserts or swipes their card at the cash out terminal;
- (d) staff member enters the withdrawal amount at the EFTPOS terminal;
- (e) patron confirms withdrawal amount by touching EFTPOS terminal screen;
- (f) patron confirms Fee;
- (g) patron approaches cash out terminal and inserts card;
- (h) assuming the transaction is approved through the messaging system by their financial institution, the cash is dispensed.
103. The cash-out terminal at Mr Mamo's club is located about 25 metres from the bar where the EFTPOS terminal is located. However, I accept Mr Blackett's evidence that they were "normally within eyeshot" of the bar so that staff could direct patrons to the terminal.[14]
POSConnect Under Counter (Attended) Terminal services
104. This second generation of the Equipment allowed the initiation of the transaction and the cash dispensing to be located at the same place or at least closer. In the example described by Mr Mamo, the cash out terminal was located about five metres from the bar where a staff member could enable the Equipment using a remote control device. There may be multiple remote controls, which could be located at different bars, for a single cash dispenser.[15]
105. The steps involved were:
- (a) patron approaches staff member and requests cash out in a specified amount;
- (b) staff member enables the cash out terminal and enters the requested amount using a remote control device;
- (c) patron approaches the terminal, inserts or swipes their card and enters their PIN;
- (d) patron confirms the Fee;
- (e) the cash is dispensed to a staff member who hands it to the patron or, in some cases where the cash dispenser faced outwards from the bar, removed by the patron.[16]
Transcript, P-156, lines 32-45.
ATC 11698
POSConnect Remote Control (Unattended) Terminal services
106. The current iteration of this third generation of the Equipment is described in Mr Mamo's affidavit. Mr Mamo deposed that the cash-out terminal is located about five metres from the bar. One or more remote control devices are located behind the bar.
107. The steps required for a withdrawal are:
- (a) patron approaches staff member and requests cash out in a specified amount;
- (b) staff member enables the cash-out terminal and selects the requested amount;
- (c) patron approaches the terminal, inserts their card and enters their PIN;
- (d) patron confirms the Fee;
- (e) cash is dispensed.
108. Mr Blackett deposed that the first version of the Remote Control (Unattended) equipment only required the patron to request a staff member to enable the machine. The staff member would do this using a remote control device held behind the bar. Thereafter the patron would insert their card and enter their PIN, select an amount to be withdrawn, approve the Fee and, assuming the transaction is approved by their financial institution, receive cash dispensed from the terminal. There is no evidence before the Tribunal regarding how many, if any, of the first version were in use in the relevant tax period.
Ordinary meaning of automatic teller machine service
109. It is the composite expression "automatic teller machine services" that is to be construed and applied.
110. In considering the ordinary meaning of automatic teller machine service, I have had regard to my own understanding from common experience of ATMs. In that regard, I adopt the submission of Mr O'Meara, who appeared for the applicant, that it is appropriate to take into account my own experience but not to the exclusion of other evidence. That is consistent with the approached endorsed by the Full Federal Court in
Lansell House Pty Ltd v Commissioner of Taxation.[17]
111. I have also had regard to the dictionary meaning of automatic teller machine service put forward by the applicant;[18]
112. Before turning to consider the meaning of automatic teller machine service, I note that I accept that:
- (a) none of the following features, in itself, necessarily prevents the withdrawal service being characterised as an ATM service:
- (i) unavailability of other services, such as account balances;
- (ii) use of the term "surcharge" for the Fee;
- (iii) use of the EFTPOS network;
- (iv) the messaging format;[19]
Confirmed by Mr Swannell: Transcript, P-310, lines 39-42. - (v) the description of the service as an EFTPOS cash out service;
- (b) there is substantial (but not complete) automation involved in the supply of Banktech's withdrawal services - although this varies between the versions of the Equipment - and the means by which the service is accessed: swiping a card and entering a PIN;
- (c) in facilitating withdrawal of cash from an account, the Equipment serves the same purpose as a conventional ATM when a customer engages with an ATM for that purpose (especially, but not only, when considered from the perspective of the customer).
113. In respect of the function of the Equipment, nothing in the text, legislative context or policy of s 40-5.09(5) gleaned from the Explanatory Statement extracted above suggests the provision is to extend beyond services properly characterised as automatic teller machine services to their economic equivalents. To the contrary, the policy indications are that s 40-5.09(5) was introduced to ensure parity in the treatment of ATMs services provided by ADIs and those supplied by non-ADI providers. That policy is given effect by confining s 40-5.09(5)'s operation to ATM services; a construction extending its coverage to other economically-equivalent services is not necessary to give effect to the apparent policy of the provision.
114.
ATC 11699
That the intended reach of the provision is limited in that way is also consistent with its terms; s 40-5.09(5) is not, for example, expressed to apply to services "of a kind" provided through an ATM. In any case, withdrawal of cash through an EFTPOS terminal at a retailer's check out is also substantially equivalent to a withdrawal using the Equipment. It is not suggested such withdrawal services are covered by s 40-5.09(5). Why not? Because they are not ATM services. Common experience and the expert evidence is that consumers use cash-out services as a substitute for withdrawal of cash from an ATM but that does not make the service an ATM service. Especially in the iteration in which a venue staff member hands over the cash dispensed by the Equipment to the customer, the customer experience is also substantially similar to an EFTPOS cash-out withdrawal at a retailer's check out.115. The expression "automatic teller machine service" itself suggests its meaning: services that a teller might have provided but which are provided in an automated way through a machine. In the context of a withdrawal, common understanding and experience is that a teller might provide a service that comprises: accepting a request for a withdrawal; dispensing cash in the requested amount; entering details of the withdrawal in the bank's records so that a debit is entered against the accountholder's account; and providing a written record of the transaction. A conventional ATM provides those services automatically; that is, without any human intervention other than by the account holder. The service so provided is an automatic teller machine service.
116. The applicant's submissions stated:[20]
The Macquarie Dictionary gives the ordinary plain meaning of automatic teller machine to mean computerised equipment located outside banks and building societies, in shopping areas, etc., offering basic banking facilities and operated by inserting a plastic card with a magnetised strip and keying in a personal identification number.
117. I take it to be implicit in that definition that automatic teller machines are operated merely by inserting a card and keying a PIN. That is consistent with common experience. It is also consistent with the Payments Consulting Network's definition which refers to machines capable of automatically dispensing cash. The applicant went on to submit:[21]
Reduced to its essentials, an ATM is a self-service machine offering basic banking facilities to a cardholder inserting their card and pin.
118. Two aspects of these definitions present difficulties for the applicant's case. The first is the "automatic" or, as the applicant expresses it, "self-service", dimension; unlike conventional ATM services, a customer cannot enjoy the cash-dispensing service from the Equipment without staff intervention. The second is the concept of an automatic teller machine ; that suggests, and common experience confirms, that ATMs comprise a single unit of equipment (machine), whereas the Equipment requires a separate device - either an EFTPOS terminal or remote control device - which the evidence establishes is kept and used at a physically separate location.
119. The applicant endeavoured, for the first time in reply submissions, to overcome the first difficulty by arguing the customer receives two supplies: a supply for no consideration which is made by the venue whose staff facilitate access to the cash dispensing service and a supply by the applicant of the ATM withdrawal service which involves no human intervention.
120. That strikes me as an artificial dissection of what is in a practical sense a single supply the customer receives in return for the Fee - a cash withdrawal service. The service may be facilitated by venue staff, rather than by staff of the applicant, but that does not determine the character of the thing supplied by the applicant. It is central to the applicant's case that it supplies a service of withdrawal from an account. It would, in my view, be an unrealistic characterisation of the supply made by the applicant to the customer as a withdrawal service provided automatically when the withdrawal simply cannot be made without human intervention. It was, after all, the requirement for staff engagement when patrons withdraw cash, introduced by the problem gambling laws, that was the catalyst
ATC 11700
for the replacement of Banktech's ATMs at gambling venues with the Equipment.121. Against this, the applicant points out that agreements between Banktech and venues do not appoint the venue operator or its staff as agent for Banktech. That is confirmed in the agreement appended to Mr Mamo's affidavit. However, that is not determinative. The agreement does require the venue to facilitate provision of the withdrawal service which it is incentivised to do by the payment of a rebate by Banktech.
122. There are any number of supplies that are made by one entity but facilitated by one or more other persons or entities. Take, for example, a building contract under which the head contractor contracts to construct a house. The head contractor may perform minimal work itself, instead engaging subcontractors to carry out the work. The contract would nonetheless be properly characterised as a building contract. Indeed, the processing of transactions conducted through the Equipment is not carried out by Banktech but by its associated entity, EFTEX Pty Ltd.
123. Here, to be input taxed, Banktech's Supply must have the character of a service of withdrawal from an account. It is a reality that Banktech cannot make a supply of a withdrawal service through the Equipment without direct engagement by a venue staff member. So far as automaticity is a requirement, the character of Banktech's Supply cannot be determined by ignoring that reality.
124. The applicant drew attention to a response to a cross-examination question in which Mr Swannell agreed that the requirement for staff intervention to press a button on a remote control device and specify the amount of the proposed withdrawal "doesn't substantively change the automated nature of the teller services provided by the machine to the cardholder". I take this evidence into account but make the following observations.
125. First, I accept that the process of withdrawing cash remains substantially automated. Secondly, the degree of change to the automated nature of the process requires a value judgement which Mr Swannell and the other witnesses are no better placed than the Tribunal to make. Thirdly, the statutory question of whether the services are ATM services is assisted, but not determined, by that judgement. Fourthly, the evidence does not assist in determining whether equipment that dispenses cash in a less than fully automated fashion - that is, requiring human intervention - is an automatic teller machine service.
126. I am not aware of, nor was my attention drawn to, any other equipment known as an automatic teller machine or an ATM where the service requires human intervention. There are, of course, assisted ATM services where an ATM is located inside bank premises and bank staff may assist some customers in operating the ATM. But those ATMs, in my experience, are conventional ATMs capable of providing withdrawal and other services without staff intervention. The evidence did not suggest otherwise.
127. Of course, the evidence of Mr Martinus is that equipment of this kind is an ATM and withdrawal from such equipment is an "ATM transaction". Mr Martinus' evidence establishes that industry members may[22]
128. Further, Mr Martinus himself drafted the definition upon which he relies. His report indicates that he intended the definition used for the ATM Round Table data-gathering to cover ATMs as well as what he described as:[24]
Cash dispensers on the EFTPOS or ATM networks using a customer service representative (i.e. assisted self-service role) to work around the gaming legislation in Victoria which prohibited ATMs, used in a fully self-service manner, from being located in the gaming area …
129.
ATC 11701
That evidence suggests Mr Martinus was mindful to include in the reporting data transactions through machines that were not ATMs - machines that, in fact, were designed to "work around" legislation affecting ATMs. Further, Mr Martinus' approach ultimately seems to have been based on similarity of function rather than identity of character as the following response to questioning indicates:[25]So, from our perspective, if it serves the same function as an ATM device and from a consumer perspective, they're using it in a similar way, that's how we're defining it as an ATM.
130. Similar observations apply in relation to the response of Mr Tweddle to a question asking whether he agreed that, apart from where a staff member handed over the cash, "the process by which the amount is debited from the cardholder's account, and the cash is dispensed, is an automated process". Additionally, I note that the processes as so described may be automated but those processes do not constitute the totality of the staff intervention required to effect a withdrawal. Crucially, staff intervention is required at the outset to activate the Equipment and enter the withdrawal amount.
131. Nor am I aware of, and my attention was not drawn to, examples of any other equipment requiring two or more devices to operate and which is known as an automatic teller machine or ATM. Let alone where one such is not accessible to or used by the customer or, as with the POSConnect Cash Out Terminal, such a device may be located some 25 metres from where the cash is dispensed.
132. That, I infer, is because equipment of that kind is not ordinarily known as an ATM. That inference tends to be supported by the fact that Banktech itself does not refer to the Equipment as an ATM. A sample operation and service agreement for conventional ATMs produced by Mr Mamo refers to the equipment throughout as an ATM. The corresponding sample agreement for Banktech's cash dispensing service provided using the Equipment does not use the expression automatic teller machine or ATM. Similarly, although automatic teller machines are commonly badged as such, the words automatic teller machine or ATM do not appear on the Equipment or in promotional material.
133. Mr Blackett confirmed in cross examination that Banktech did not promote the Equipment as ATMs but rather as "EFTPOS cash out facilities".[26]
All right, you want to make that distinction? --- Yes, only because I suppose EFTPOS is a fairly generic term, and we - in most of our promotional activity, we always promoted EFTPOS cash out because it was - I mean, the cash out is what people know. They go - they don't really go to an ATM; they go to a device because they know they can get cash out of it.
134. I accept this evidence may reflect Banktech's thinking for promotional purposes although I would also infer that Banktech would not want to promote its Equipment as ATMs when the very purpose of developing the Equipment was to, as Mr Martinus put it, "work around" the prohibition on ATMs in gambling venues. I do not accept the premise that people "don't really go to an ATM; they go to a device because they know they can get cash out of it." Common experience informs that the expression ATM is well known and used. Persons seeking to withdraw cash from an ATM would in my view most commonly say they are going to an ATM. Most commonly, they will be going to get cash out, but they would say they are getting cash from an ATM. That common experience informs my decision-making but is, of course, not determinative.
135. It is also notable that Mr Blackett was not prepared to say the Equipment is an ATM as the following exchange indicates:[27]
MS HIRSCHHORN: Thank you, Mr Blackett. In paragraph 24 [of Mr Blackett's affidavit] in the first sentence you say, 'POSConnect terminals are cash dispensing machines in similar function to traditional ATMs and cash connect ATMs.' You do not say here that POSConnect terminals are traditional ATMs, do you? --- I don't say they're traditional ATMs. I say they're an automated cash dispenser or an automated teller - they all
ATC 11702
perform the same function, that what I am really trying to get across there.Thank you. And my second question here is you're not saying here that POSConnect terminals are Cash Connect ATMs, are you? --- No.
136. Of course, the statutory question is not whether the Equipment performs the same function as an ATM. The statutory question is whether the Supplies are automatic teller machine services of withdrawals from an account.
137.
Conclusion: The applicant has not discharged the burden of proving its supplies of cash withdrawal services using the Equipment are ATM services of withdrawal from an account.
[28]
DISPOSITION OF REVIEW
138. In view of my conclusion that the Supplies are not input taxed by s 40-5.09(5), the decision under review must be affirmed.
APPENDIX 1: JOINT CHRONOLOGY OF LEGISLATIVE & INDUSTRY DEVELOPMENTS| Date | 139. Event | 140. Tribunal Book ref. | Applicant's comments |
| 1992 | 141. Australian Payments Clearing Association Limited ( APCA ), (now AusPayNet ) was established. | 142. TB 6/89/2012 (Swannell [5]) | |
| 1 July 2000 | 143. A New Tax System (Goods and Services
144. Tax) Act 1999 and GST Regulations 1999 commences. |
145. Respondent's Authorities Tabs 1 (Act) and 4 (Regulations) Respondent's Supplementary Authorities (21 June 2023): Explanatory Statement (GST Regulations 1999) | |
| 14 December 2000 | 146. APCA publishes Consumer Electronic Clearing System ( CECS ) manual and CECS Regulations. | 147.
TB 9/127/2895
(manual);
148. TB 11/131/3652 (Regulations, including list of initial CECS Members at p. 3716) |
The reference to the list of initial CECS Members is to be understood in its context.[29]
ATC 11703 |
| 6 September 2004 | 149. RBA designates the EFTPOS system as a payment system under the Payment Systems (Regulation) Act 1998, effective 9 September 2004 ( 2004 EFTPOS designation ). | TB 6/75/1792 | |
| 27 April 2006 | 150. RBA releases a package of reforms to the EFTPOS system, one of which is the determination of an Access Regime ( EFTPOS Access Regime ) which is to operate in conjunction with an EFTPOS Access Code . | TB 15/150/5220 ( at p. 5222 ) | The description of the "Event" is not an accurate description of the RBA Media
Release at TB 15/150/5220.[30] |
| 8 September
2006 |
EFTPOS Access Code adopted by EFTPOS Access Australia Limited | TB 15/151/5229 | |
| 12 September
2006 |
RBA imposes the EFTPOS Access Regime | TB 15/152/5229 | |
| 1 February 2008 | APCA publishes revised CECS manual effective 1 February 2008.
The definition of ATM was at cl.1.5 (amended effective date 15/8/05). |
TB 10/128/3017 | Applicant disagrees with Commissioner's submission "The definition of ATM was at cl.1.5". See reasons for objection in footnote 1. |
| 23 May 2008 | APCA publishes revised CECS manual effective 23 May 2008. | TB 10/129/3221 | |
| December 2008 | Industry participants wrote to RBA calling for the designation of the ATM system and regulation by the RBA. | TB 15/154/5238 (at p.1) | There is no direct evidence as to who wrote to the RBA and the content of their request.
No weight can be given to the secondary evidence at TB 15/154/5238 that unidentified people made unparticularised requests for regulation. |
| 8 December
2008 |
RBA designates the ATM system as a payment system under the Payment Systems (Regulation) Act 1998. | TB 6/77/1797 |
ATC 11704 |
| 10 December
2008 |
RBA issues 'Access Regime for The ATM System: A Consultation Document'. | TB 15/154/5236 | |
| 24 February
2009 |
RBA releases an Access Regime for the ATM System ( ATM Access Regime ). | TB 6/78/1798 at 1819 | |
| 25 February
2009 |
Regulation 40-5.09(4A) was made by Select Legislative Instrument 2009 No.29 under the A New Tax System (Goods and Services Tax) Act 1999 to come into effect 3 March 2009. | Respondent's Authorities Tab 3; Explanatory Statement: Tab 13 | |
| 3 March 2009 | RBA's ATM Access Regime (imposed under section 12 of the Payment System (Regulation) Act 1998) comes into effect. | TB 6/79/1803 at 1818ff | |
| 3 March 2009 | ATM Access Code comes into effect. | TB 5/70/1619 (Access Code); TB 18/219/6073-74 | |
| 3 March 2009 | By operation of A New Tax System (Goods and Services Tax) Amendment Regulations 2009 (No.1), former regulation 40-5.09(4A) of the GST Regulations 1999 commences. | Respondent's Authorities Tab 3; Explanatory Statement Tab 13 | |
| 20 April 2009 | APCA publishes revised CECS manual effective 20 April 2009. Amendments included new definition of ATM Direct Charging Date of 3 March 2009 and new Part 11 entitled 'ATM Direct Charging Rules'. | Respondent's Supplementary Bundle Tab R43 - (extract only) | Applicant disagrees with words commencing "Amendments included" to end of sentence.
See reasons for objection in footnote 1. |
| 14 April 2009 | EFTPOS Payments Australia Limited ( EPAL ) was registered (later known as eftpos Payments Australia Limited). | TB 18/195/5927 |
ATC 11705 |
| 2010 | EPAL adopted the eftpos Scheme Rules. |
TB 5/68/1593
(Richards [5]);
TB 2/44/599 (example only, effective 27 October 2020) |
The Applicant does not know the content of the rules adopted by EPAL as referred to by Mr Richards at TB 5/68/1593/[5].
The Applicant cannot admit that the document at TB 2/44/599 resembles the document adopted by EPAL in 2010. |
| 2011 | EPAL sets a multilateral interchange fee schedule. | TB 5/68/1593 (Richards [5]); TB 4/55/1391 (example only, effective 2020) | Same objection as above |
| 12 June 2012 | RBA designates the EFTPOS system as a payment system under the Payment Systems (Regulation) Act 1998. | TB 6/80/1823 | |
| 26 August 2014 | APCA publishes revised CECS manual effective 26 August 2014. | TB 11/130/3425 | |
| September 2014 | EPAL launches the eftpos Hub. | TB 16/164/5356 at 5359 | |
| 1 July 2015 | CECS manual is replaced, effective from this date, with the Issuers and Acquirers Community ( IAC ) Framework Regulations and Code Sets, administered by AusPayNet (formerly APCA). |
TB 12/133/3807 to TB 13/133/4447
(IAC Code Set - version effective 1 July 2020); TB 15/135/4957 (IAC Regulations- version effective 1 January 2020) |
The Applicant does admit that the document at TB/12/133/3807 and TB/15/135/4957 is in the same form as the document adopted by IAC on 1 July 2015. |
| 28 August 2015 | RBA revokes 2004 EFTPOS designation and EFTPOS Access Regime. | TB 16/162/5340 | |
| 1 April 2019 | A New Tax System (Goods and Services Tax) Regulations 2019 commences, and the GST Regulations 1999 are repealed. |
Respondent's Authorities Tab 5; Explanatory Statement: Tab
14 |
Footnotes
[1][2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29]
[30]
This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.