• Claiming GST credits on purchases for volunteers

    A not-for-profit organisation must be registered for GST to claim GST credits for the GST included in the price of the purchases it makes in carrying on its activities. This includes things it buys for its volunteers in carrying on its enterprise.

    Examples: Entitled to claim

    A sporting club buys uniforms for its volunteer players. The club is entitled to a GST credit for the GST in the price of the uniforms.

    A charity buys a car for volunteers to use when carrying out the organisation’s services. The charity is entitled to GST credits for the GST in the purchase price of the car.

    End of example

    Input-taxed sales

    A not-for-profit organisation cannot claim GST credits for the GST in the price of purchases it makes (whether for a volunteer or not) that are for the purpose of making input-taxed sales.

    When an organisation makes an input-taxed sale, it does not have to remit GST on the sale. However, it is not entitled to claim any GST credits for the GST in the purchase price of things that it buys to make that sale. Only certain types of sales are input taxed.

    A not-for-profit canteen at a school may choose to treat its sale of food and beverages as input taxed.

    Endorsed charities, gift-deductible entities and government schools may choose to treat sales at the following fundraising events as input taxed:

    • a fete, ball, gala show, dinner, performance or similar event
    • an event where all goods are sold for $20 or less (except for alcohol and tobacco products)
    • an event approved by the Commissioner of Taxation as a fundraising event.

    If an endorsed charity, gift-deductible entity or a government school holds a particular fundraising event more than 15 times a year, sales at each of the events cannot be treated as input taxed.

    Example: Not entitled to claim

    A charity has chosen to treat its sales made at an annual fete as input taxed. The stalls at the fete are staffed by volunteers. The charity buys a red rose for each volunteer to wear while serving at the stalls.

    The charity cannot claim GST credits for the GST in the purchase price of the red roses as they are purchased for the purpose of making input-taxed sales at the fete.

    End of example

    Entertainment

    If a not-for-profit organisation provides entertainment to its volunteers, it generally cannot claim GST credits for the GST included in the cost of the entertainment. Entertainment means:

    • entertainment by way of food, drink or recreation
    • accommodation or travel to do with providing entertainment by way of food, drink or recreation.

    Generally, if an organisation provides light meals, such as hot or cold sandwiches, morning and afternoon tea or non-alcoholic refreshments to its volunteers this will not be considered entertainment. The organisation can claim GST credits for the GST included in such expenses.

    More elaborate meals are considered entertainment. Any food or drink provided in a social setting such as dinners, parties and social functions are considered entertainment.

    This includes meals provided in a social setting at an in-house dining facility. An organisation cannot claim GST credits for the GST included in such entertainment expenses.

    If an organisation provides food, drink, accommodation or travel that is reasonably incidental to a volunteer’s attendance at a seminar, of at least four hours duration, it can claim GST credits for the GST included in such expenses.

    Examples: Entitled to claim

    An emergency-services organisation provides sandwiches and pastries to volunteers during an operation. The organisation is entitled to claim GST credits for any GST included in the expenses incurred.

    A surf lifesaving club holds an all–day training course for its volunteer lifesavers. During the day, the club provides a smorgasbord of hot and cold foods. The surf lifesaving club is entitled to claim GST credits for any GST included in the expenses incurred.

    Example: Not entitled to claim

    A charity holds an end-of-year dinner as a thank you to its volunteers. The charity is not entitled to claim GST credits for any GST included in the expenses incurred.

    End of example

    See also:

    Charities Consultative Committee Resolved Issues document parts 3 and 4

    Last modified: 20 Jul 2015QC 46364