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Edited version of private ruling
Authorisation Number: 1011697639870
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Ruling
Subject: GST and taxable supplies
Question
Are you required to remit goods and services tax (GST) on your supplies made to a customer that has provided you with a document stating they are exempt from GST?
Answer: Yes.
Relevant facts and circumstances
You are registered for GST.
You received a document from one of your customers stating that GST does not apply to them due to them being a non-profit organisation and for other various reasons.
This customer has also supplied you with an ATO publication (reference NAT 3346): Statement by a Supplier.
You do not make input taxed supplies.
Your supplies made to this customer are for consideration and cannot be treated as being GST-free.
You and this customer are not associates, are not members of the same GST group and do not have a pay-as-you-go voluntary agreement in place.
Reasons for decision
Summary
A non-profit organisation is not exempt from paying GST on its acquisitions.
Detailed reasoning
Section 7-1 of the GST Act provides that GST is payable on taxable supplies.
Following this, you make a taxable supply where all the following requirements of section 9-5 of the GST Act are satisfied:
You make a taxable supply if:
(a) you make the supply for *consideration; and
(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and
(c) the supply is *connected with Australia; and
(d) you are *registered, or *required to be registered [for GST].
However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.
Note that the asterisks denote a defined term in the GST Act.
You make supplies to this customer for consideration and in the course of carrying on your enterprise. The supplies are connected with Australia as they are made in Australia and you are registered for GST. You do not make input taxed supplies and the supplies made to this customer cannot be treated as being GST-free.
Consequently, your supplies to this customer satisfy section 9-5 and would therefore be taxable.
No GST exemption
The customer has provided you with a document stating that they are exempt from GST given they are a non-profit organisation and for other various reasons.
Such an organisation can be exempt from income tax under certain circumstances. However, as you and this customer are not associates, are not members of the same GST group and do not have a pay-as-you-go voluntary agreement in place, there are no legislative provisions in the GST Act or any other Act that can overrule the application of section 9-5 of the GST Act.
As such, this customer is not exempt from meeting the full GST costs of its acquisitions including the situation where a supplier uplifts the price of their goods or services to take into account the GST payable.
A non-profit organisation may be entitled to register for GST which would then allow it to claim back the GST included in the price of its creditable acquisitions.
NAT 3346: Statement by a Supplier
This form is used in situations where a supplier does not quote their Australian business number. It has no relevance when it is supplied by the recipient of a supply such as your customer.
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