• Specific questions and answers

    Question 1. Are there GST implications when a hospital supplies its volunteers with light meals?

    Non-interpretative – straight application of the law

    Where the supply of a light meal is not directly linked to the provision of the volunteer labour, namely there is no pre existing agreement or understanding that the volunteer will receive a meal in return for their labour the supply of the meal would not be subject to GST as there is no consideration for the supply. However, where a light meal is supplied as part of an agreement or understanding the hospital has with its volunteers it is a supply for consideration in that the volunteer provides labour which is in part consideration for the meal.

    For more information on the provision of food to volunteers and the application of GST please refer to the fact sheet: Volunteers and tax (NAT 4612).

    Question 2. Is GST payable on uniforms if:

    • the charity buys the uniform?
    • the charity asks the recipient to make a contribution towards the cost of making the uniform that is less than 50% of the market value?
    • the charity sells the uniform to the recipient?

    Non-interpretative – straight application of the law

    If a registered supplier makes a taxable supply of uniforms to a charity, then the price must include GST. The charity (if registered) is entitled to a credit for the GST included in the price if it buys the uniforms in carrying on its enterprise.

    Where a recipient makes a contribution which is less than 50% of the GST inclusive market value of the uniform, the supply of the uniform by the charity is GST-free.

    If a registered charity sells the uniform to the recipient for a price that is both 50% or more of the market value of the uniform and 75% or more of the consideration it provided in acquiring the uniform, the price to the recipient must include GST.

    Question 3. Will the expenses which organisations incur to support their volunteer workforce be treated as legitimate input tax credits?

    Non-interpretative – straight application of the law

    If charities are registered and they pay GST on acquisitions to support their volunteer workforce they will be entitled to input tax credits on those acquisitions.

    Question 4. There will be an increase in 'out of pocket' expenses for volunteers. As volunteers are not 'entities' they cannot claim input tax credits. How will this be treated?

    Non-interpretative – straight application of the law

    Subsection 111-18 has been added to the legislation to enable a charity to claim input tax credits for reimbursements to volunteers of expenses. These expenses must be directly related to the activities of the charity.

    Question 5. Are payments made by way of honorariums, such as guest speakers, be subject to GST?

    Non-interpretative – straight application of the law

    Payments made to a guest speaker who is registered will be subject to GST where the activities are made in respect of the speaker's enterprise.

    Question 6. Will GST apply to contractors who are employed by a charitable or not-for-profit organisation? If so, would it therefore be better for organisations to hire on a permanent basis?

    Non-interpretative – straight application of the law

    Contractor services are subject to GST and the entity is entitled to input tax credits. Organisations will need to consider whether to employ or use contractors, based on their own circumstances, the services required and balancing these with the costs associated with maintaining employees.

    Question 7. Do psychologists and social workers in government funded services have the same status as private professionals?

    Non-interpretative – straight application of the law

    Where the psychology and social work is provided by a recognised professional and is recognised as being necessary as appropriate treatment then the supply would be GST-free. The supply of psychology and social work services are specifically covered by section 38-10.

    Question 8. Is a charity (or other non-profit body) required to deduct the 46.5% withholding tax from payments made to volunteers to reimburse them for their expenses (such as petrol money)?

    Non-interpretative

    For information on volunteers and withholding tax refer to the fact sheet Volunteers and tax (NAT 4612).

      Last modified: 18 Nov 2013QC 27139