ATO Interpretative Decision

ATO ID 2005/121

Goods and Services Tax

GST and supply of meals to clients in an in-house dining facility
FOI status: may be released
  • With effect from 1 July 2015, the term 'Australia' is replaced in nearly all instances within the GST, Luxury Car Tax and Wine Equalisation Tax legislation with the term 'indirect tax zone' by the Treasury Legislation Amendment (Repeal Day) Act 2015. The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts. For readability and other reasons, where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the entity, a business operator, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides meals to clients in an in-house dining facility for no consideration but in accordance with section 32-70 of the Income Tax Assessment Act 1997 (ITAA 1997), it includes $30 in its assessable income for each meal provided?

Decision

No, the entity is not making a taxable supply under section 9-5 of the GST Act, when it provides meals to clients in an in-house dining facility for no consideration but in accordance with section 32-70 of the ITAA 1997, it includes $30 in its assessable income for each meal provided.

Facts

The entity is a business operator and is registered for goods and services tax (GST).

The entity supplies meals to clients in an in-house dining facility. The entity does not receive any consideration from the client for the provision of the meal. The client is not an associate of the entity.

In accordance with section 32-70 of the ITAA 1997, the entity includes $30 per meal as assessable income for meals provided to clients. This allows the entity to claim an income tax deduction for the cost of the meal provided to clients.

Reasons for Decision

Under section 9-5 of the GST Act, an entity makes a taxable supply if:

it makes a supply for consideration
the supply is made in the course or furtherance of an enterprise that it carries on
the supply is connected with Australia, and
the entity is registered or required to be registered for GST.

Under the first requirement of section 9-5 of the GST Act, the supply made by the entity must be for consideration. The entity supplies meals to clients in its in-house dining facility. The entity does not receive any consideration from the client for the provision of the meal. However, under section 32-70 of the ITAA 1997, the entity includes $30 in its assessable income, allowing the entity to be eligible to claim a deduction.

'Consideration' is defined in section 9-15 of the GST Act to include any payment, act or forbearance, in connection with, in response to or for the inducement of a supply of anything.

This $30 is the arbitrary amount statutorily deemed for income tax purposes to allow a deduction under the ITAA 1997. The inclusion of $30 in the entity's assessable income is not the receipt of consideration. As such, there is no consideration provided for the entity's supply of the meal in its in-house dining facility.

Therefore, the entity is not making a taxable supply under section 9-5 of the GST Act when it provides meals to clients in an in-house dining facility for no consideration but in accordance with section 32-70 of the ITAA 1997, it includes $30 in its assessable income for each meal provided.

Date of decision:  20 August 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 9-15

Income Tax Assessment Act 1997
   section 32-70

Related ATO Interpretative Decisions
ATO ID 2005/122

Keywords
Goods and services tax
GST supplies & acquisitions
GST consideration
GST supply
Taxable supply

Siebel/TDMS Reference Number:  1244430

Business Line:  Indirect Tax

Date of publication:  13 May 2005

ISSN: 1445-2782