ATO Interpretative Decision
ATO ID 2001/145
Goods and Services Tax
GST and prize feesFOI status: may be released
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Information on this issue is found in Goods and Services Tax Ruling GSTR 2002/3.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 golf club, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it receives non-compulsory prize fees from golf club members?
Decision
Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it receives non-compulsory prize fees from golf club members.
Facts
The entity organises a weekend golf competition for golf club members.
To be eligible to receive a prize on finishing in the run down, entrants must pay a prize fee. The prize fees are used to purchase vouchers or golf balls to be given to the winning players as prizes. The vouchers can only be redeemed at the club for alcohol, meals (at the dining room) or goods (at the golf shop). This concept is referred to as an 'in-house promotion'.
It is not compulsory for players to pay the prize fee. Players who do not pay the prize fee will not receive a prize if they finish in the run down.
The entity is registered for goods and services tax (GST). The 'transaction' meets the other requirements in section 9-5 of the GST Act.
Reasons for Decision
Section 9-5 of the GST Act sets out the requirements that must be met for an entity to make a taxable supply. The existence of a 'supply' itself is an essential element in determining whether a 'transaction' is a taxable supply under section 9-5 of the GST Act.
Section 9-10 of the GST Act discusses the meaning of the word 'supply' for GST purposes. Paragraph 9-10(2)(e) of the GST Act states that a supply includes a creation, grant, transfer, assignment or surrender of any right.
In this case, the golf club is granting its members the right to be eligible to receive a prize if they finish in the competition run down. Accordingly, the entity is making the supply of a right.
Therefore, as the entity is registered for GST and the transaction is a 'supply' that fulfils all of the requirements of section 9-5 of the GST Act; and is neither GST-free under Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act; the entity is making a taxable supply under section 9-5 of the GST Act.
Date of decision: 4 April 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
section 9-10
paragraph 9-10(2)(e)
Division 38
Division 40
Keywords
Goods and services tax
Sports clubs
Sporting organisations
Prizes & awards
Taxable supply
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 4 April 2001 | Original statement |
| 25 November 2005 | Archived |
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