GST and grants

The GST treatment of grants depends in part on whether something is supplied in return for the grant or sponsorship money.

When a grantee makes a taxable sale

A grantee will be required to remit 1/11th of a grant of financial assistance and funding payment it receives to us as GST where the grantee makes a taxable sale.

The GST treatment of grants depends primarily on whether the grant represents consideration that has the relevant connection with a taxable sale. This will depend on the particular facts and circumstances of each grant program. The term 'grant' is not defined and the general principles of the GST law apply in determining whether GST is payable on a grant transaction.

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GST definitions: taxable sales

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GSTR 2012/2External Link Goods and services tax: financial assistance payments

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If you're unsure about GST on your grant

Both the grantor and grantee must treat grant transactions consistently for GST purposes.

Some government and other entities provide recipient-created tax invoices (RCTI) for grants.

To make sure that the grant arrangement is treated consistently for GST purposes, if the RCTI shows that the grantee is making a taxable sale, the grantee must pay the GST. If the grantee thinks it is not a taxable sale and an RCTI is issued showing that it is a taxable sale, they should discuss this with the grant provider.

If the grantee and grantor disagree about the GST implications for the grant arrangement, they can consider requesting a private ruling. We recommend that the grantee and grantor lodge a joint private ruling request so that we can provide both with consistent advice based on accurate facts.


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Grants and sponsorship

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    Last modified: 06 May 2014QC 21423