Accounting for GST on goods or services you provide or receive
You may need to account for:
There are two methods of accounting for GST:
- a cash basis
- a non-cash basis.
It is important that you are familiar with the accounting method you adopt when completing your activity statement.
Find out more
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Preschool course related supplies
Preschool course related supplies may include:
If you provide administrative services directly related to the supply of a preschool course, these services are GST-free if you are the supplier of both the services and the course.
Administrative services include:
- enrolment processing
- preparation and printing of student progress reports
- arrangement of meetings with students, parents, guardians
- administration of other preschool activities.
If you sell materials which are necessarily used up by the students in undertaking the course, the materials are GST-free. For example, the following sales would be GST-free:
- exercise or work books
- arts and craft materials.
The sale of goods such as story books, musical instruments or sporting equipment is not GST-free as these goods are not expended by use. Even though they may be necessary in order to teach the curriculum, they retain their character and have ongoing use as story books, instruments or sporting equipment after the completion of the course.
Supplying rights to attend a preschool course
If you charge a fee that creates a right for a student to participate in your preschool course (that is, you guarantee a position for the student), the fee is not subject to GST.
Such fees include those:
- for enrolling in a course
- to confirm a student's place at your preschool.
Where an agent, such as a local council or central enrolment authority, charges a fee on your behalf that legally binds you to provide education to a student, that fee is not subject to GST.
If you, or your agent, charge a fee that merely creates a right to be considered for a position in a preschool and does not guarantee entry (for example, adding a student's name to a waiting list) that fee is subject to GST.
A local council organises the enrolment process for all children in its district to participate in preschool courses. Some of the preschool courses are conducted by the council and some are offered by private providers. The council charges parents a fee of $50 to guarantee each child a place in the preschool closest to their residence.
The council does not include GST in the fees because it is either:
- acting as an agent (by allocating rights on behalf of a private service provider)
- acting in its own right (by allocating rights as a service provider).
If the council collects course fees on behalf of a preschool, and subsequently passes on the collected fees to the preschool, the fees are GST-free.
If an agent (such as a local council) charges for collecting the fees, then the supply of the collection service by the council to the preschool is taxable.
A local council organises the enrolment process for children to attend a privately run district preschool. As part of this process, the council collects course fees on the preschool's behalf. The preschool is registered for GST.
Course fees are charged at $111 per child. As the course is GST-free, the preschool reports each $111 fee as a GST-free supply on its activity statement.
The council retains an $11 administration fee per student for collecting the course fees and forwards the remaining $100 per student to the preschool. Each $11 administration fee is subject to GST, therefore, each fee includes GST of $1.
The preschool reports each $11 fee on its activity statement as an acquisition. The preschool also claims a GST credit of $1 for each $11 fee paid to the council.
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Curriculum-related activities or instruction have a direct relationship to the education course and are generally provided by someone other than the preschool, such as an independent contractor.
If you purchase taxable supplies from a service provider and you are registered for GST, you are entitled to claim a GST credit for the GST you pay. In turn, you do not include GST in the price you charge for these supplies as they are GST-free as part of an education course.
If your students pay fees directly to a service provider, the supply by the service provider is not GST-free as part of an education course.
A preschool operator contracts for a petting zoo to visit the preschool for 20 students. The zoo charges $110 (including GST).
If the preschool pays the zoo directly, it will pay $110 (including $10 GST). The preschool can then claim a GST credit of $10 on its activity statement, reducing the total cost to $100. The preschool charges $5.00 per student.
If the zoo is not contracted by the preschool but visits the preschool and each student pays $5.50 to the zoo directly, the preschool will not be able to claim a GST credit.
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Not all supplies made by service providers are curriculum related and, therefore, they may not be GST-free. Such supplies include:
- the sale of class photographs
- recreational activities such as excursions to amusement venues.
Food provided to students whilst attending a preschool course or during an excursion is not GST-free as part of the education course or the excursion; however, the food may be GST-free for other reasons.
For more information, refer to GST food guide (NAT 3338).
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Maintenance and fundraising levies
If you charge maintenance or fundraising levies, the payment is not subject to GST as it forms part of the payment for a GST-free education course.
Even if you give parents the option to participate in a working bee or a fundraising activity rather than pay the levy, the levy is still GST-free for those parents who choose to pay it.
If you are registered or required to be registered for GST, any grants you receive are subject to GST if either:
- you supply goods or services in exchange for the grant
- you are obliged to do something in exchange for the grant.
If you make a taxable supply in exchange for a grant, you must pay GST equal to one-eleventh of the grant payment. If the grant is non-monetary (such as a grant of equipment), then you must work out the GST-inclusive market value of the item in order to calculate the GST payable.
If the grant provider only expects that you will do something with the grant but there is no binding agreement, the grant is not subject to GST. In such cases, the grant is not payment for any taxable supply you are making to the provider.
If you receive a grant in exchange for supplying goods or services to a third party (for example, students), the grant is only subject to GST if there is a binding agreement between yourself and the grant provider. This is the case even if the service provided to the student would have been GST-free if the student had paid for it.
Grants from government are rarely gifts. However, if you are only required to report on how the grant was spent in exchange for the grant, the grant is not subject to GST.
Grants received in exchange for something you have already done (sometimes called reimbursement grants) are not subject to GST provided the grant is not connected to a supply of goods or services you make to the grant provider.
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Donations and gifts
If you operate as a non-profit organisation, any gifts (money, goods or services) you receive are not subject to GST. However, if you supply goods or services in exchange for the gift, the gift is deemed to be a payment for the goods or services you supply and is therefore subject to GST.
In general terms, gifts have all of the following features:
- are made voluntarily
- don't provide a material benefit to the donor
- are made in a spirit of generosity, with no expectation of receiving anything in return.
Co-payments made by parents and government
If the government pays part of the fees charged for a GST-free supply, this is a third party payment, not a grant. A third party payment occurs where the supplier and the recipient agree that a third party will pay for all, or part, of the supply. Therefore, if a co-payment is made by the parent and the government for a student's fees, the co-payments are not subject to GST as they are payments made for the GST-free supply.
Receiving 'per capita' funding (funding of a set amount per student) is not considered to be a third party payment. Per-capita funding is considered to be a form of grant and is subject to GST.
For more information, refer to Grants.
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Preschool child care services
If you provide before or after school child care services, or you are linked with a child care centre, the child care services may be GST-free if you meet one of the following requirements:
- The carer is registered with the Family Assistance Office.
Registered carers may be private preschools, kindergartens and some outside school hours care services.
- The child care service is approved by the Family Assistance Office.
An approved child care service may be a centre based long day care, occasional care or outside school hours care service.
- The child care service is funded by the Department of Families, Community Services and Indigenous Affairs.
The Minister for Family and Community Services may approve funding for occasional care, outside school hours care, or vacation care.
If you provide food directly in conjunction with a supply of GST-free child care, the supply of the food is also GST-free.
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Non-profit child care services
If you provide child care services on a non-profit basis, you may be eligible to be treated as a charity for tax purposes.
As a charity, you are eligible to receive GST charity tax concessions.