Non-Profit News Service No. 0260 - Rewrite of Part 3 of the Charities consultative committee - resolved issues document

Part 3 of the Charities consultative committee resolved issues document was updated on 17 November 2009. It deals with non-commercial activities of charities, cost of supply and market value tests.

Under GST law, supplies provided for nominal consideration by endorsed charities and certain eligible organisations (collectively referred to as charities in this article) are GST-free. Nominal consideration for a supply is consideration that is less than either:

• a stipulated percentage of the market value of the supply (the 'market value test'), or
• a stipulated percentage of the cost to the charity making the supply (the 'cost of supply test').

Part 3 has been rewritten and published as a result of continuing consultation with charities. The rewrite aims to clarify the principles used in the 'market value' and 'cost of supply' tests, and to address feedback from charities regarding difficulties in using the previous version of those tests.

The rewrite will help charities:

• better understand the principles of the 'market value' and 'cost of supply' tests
• apply those tests correctly to their individual circumstances when determining the GST status of the supplies they make.

The new Part 3 has more examples to help charities determine correctly whether the supplies they make are GST-free.

Part 3 consists of the following sections:

• cost of supply guidelines - section A
• market value guidelines - section B
• benchmark market values for charities - section C
• the GST treatment of newsletters, magazines and journals provided by charitable institutions - section D
• the cultural and performing arts sector - section E
• the supply of meals in boarding schools, university halls and colleges and other residential education settings - section F
• supplies of accommodation in university residential halls or colleges and other residential educational facilities - section G
• some specific questions and answers.

For more information, refer to the Charities consultative committee - resolved issues document on our website.

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