Edited version of your written advice

Authorisation Number: 1012929525006

Date of advice: 18 January 2016

Ruling

Subject: Goods and services tax (GST) and a charitable program

Question 1

Is the provision of aprons and meals to volunteers participating in a charitable corporate program (Corporate Program) by Entity A (you) subject to GST?

Answer 1

No, the provision of aprons and meals to volunteers participating in the Corporate Program by you is not subject to GST.

In your case, a typical feature of the Corporate Program is that you provide volunteers with aprons (which are used to protect clothing and to meet occupational health and safety requirements) and a meal. You provide these items to the volunteers so they can use them in their activities for you.

Of relevance in your circumstances is the guidance at paragraphs 60 to 62 of Good and Services Tax Ruling 2003/1 - Goods and services tax: GST and how it applies to supplies of fringe benefits (GSTR 2003/1) in relation to the GST treatment of 'work benefits'.

In particular, paragraph 60 of GSTR 2003/1 explains that a 'work benefit' is not provided for consideration (in the form of the employee's services) because the purpose of the benefit is to serve genuine and legitimate ends of the employer's enterprise, and any incidental advantage to the employee is disregarded as a minor outcome. Examples of work benefits are provided at paragraph 62, which include uniforms.

Consistent with the principle contained in the guidance in GSTR 2003/1, we consider your purpose in providing aprons and meals to volunteers is to serve genuine and legitimate ends of your enterprise, and any incidental advantage to the volunteers is disregarded as a minor outcome.

Accordingly, the provision of aprons and meals to volunteers participating in the Corporate Program is not subject to GST.

Question 2

Are monetary contributions you receive under the Corporate Program consideration for a supply you make?

Answer 2

No, monetary contributions you receive under the Corporate Program are not consideration for a supply and are not subject to GST.

All legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Subsection 7-1(1) provides that GST is payable on taxable supplies. Under section 9-5 one of the requirements for making a taxable supply is that you make a supply for consideration.

Of particular relevance in your case is whether monetary contributions you receive under the Corporate Program from donor organisations (Corporates) are treated as the provision of consideration for GST purposes.

Financial assistance payments

Guidance on when a financial assistance payment is consideration for a supply is provided in Goods and Services Tax Ruling 2012/2 - Goods and services tax: financial assistance payments (GSTR 2012/2). The term 'financial assistance payment' is intended to encompass a wide range of payments and includes payments made to provide support or aid to the payee.

In your circumstances, the monetary contributions you receive are considered to be financial assistance payments. The payments are made to provide support to you in carrying on your enterprise as a charity.

In the context of financial assistance payments, paragraph 69 of GSTR 2012/2 explains that under subsection 9-17(2) the making of a gift to a non-profit body is not the provision of consideration.

Paragraph 70 of GSTR 2012/2 explains that the term 'gift' is not defined in the GST Act and so takes on its ordinary meaning in the context in which it appears. The Commissioner considers that, for GST purposes, income tax cases relating to gifts provide relevant guidance as the income tax legislation similarly gives special treatment to gifts to some charitable and non-profit bodies.

As explained in Taxation Ruling TR 2005/13 - Income Tax: tax deductible gifts - what is a gift, it is considered that a 'gift' has the following characteristics and features:

• there is a transfer of a beneficial interest in property

• the transfer is made voluntarily

• the transfer arises by way of benefaction, and

• no material benefit or advantage is received by the giver (payer) by way of return.

Further, paragraph 112 of GSTR 2012/2 explains that applying the criteria may involve a matter of degree. In determining if a financial assistance payment is a gift it is necessary to consider the whole of the circumstances surrounding the payment, including the acts of any parties, transactions and arrangements that provide context and the explanation for the payment.

In your case, you are registered for GST as a Public Benevolent Institution (PBI) and as a charity with the Australian Charities and Not-for-profits Commission (ACNC). Corporates generally do not place specific conditions on the payments they make to you. However, there are occasional instances in which you and Corporates enter into written agreements that refer to you making volunteering opportunities available to the staff of the Corporates (Volunteers).

In considering how subsection 9-17(2) applies to the payment of the monetary contributions under the Corporate Program, it is accepted that you are a non-profit body. Further, taking account of the whole of the circumstances surrounding the making of the payment, it is considered that the payment is a gift because:

• there is a transfer of a beneficial interest in property from the Corporate to you - specifically, the amount of the payment

• the payment is made voluntarily by the Corporate

• the transfer arises by way of benefaction as you are advantaged in a material sense, and

• there is no material benefit or advantage received by the Corporate as a consequence of the payment.

Accordingly, the monetary contributions you receive under the Corporate Program are treated as not being the provision of consideration under subsection 9-17(2) and are not subject to GST.

Relevant facts and circumstances

You are registered for GST as a PBI.

You are registered as a charity with the ACNC.

You carry on an enterprise as a charity.

In order to continue your operations you rely on (amongst other things):

• monetary contributions, including in the form of donations and government funding, to meet operational costs such as delivery vehicles and employee wages

• occasional fundraising events (such as charity dinners and similar)

• volunteers.

You operate the Corporate Program in which groups of Volunteers assist you in your charitable enterprise.

The Corporate Program typically has the following features:

• the Volunteers are the staff or contractors of the Corporates

• volunteering takes place over a period of three to five hours on a single day under an instructor

• Volunteers are:

• permitted to eat a meal

• provided with your aprons, which are used to protect clothing and to meet occupational health and safety requirements, and which they can keep as a token of appreciation of their participation

• the Corporates connected with the group of participating Volunteers provide monetary contributions to you. The amount of the contributions is usually set by you and can vary based on the identity of the Corporate, the number of Volunteers involved and other factors. The monetary contribution model may be based on a set amount per group or an amount per Volunteer. In certain other cases, sessions may also be arranged following a Corporate's significant periodic contribution, such as an annual donation, or partnership with you.

Whilst there is an expectation that you will use the monetary contributions received from Corporates for your own charitable purposes, the Corporates generally do not place specific conditions on the contributions they make (including requesting reports outlining the use to which donated funds were put). Occasionally, you undertake to make available spaces within you ordinary volunteering programs for the staff of Corporates.

There are ordinarily no consistent formalised written contracts between you and the Corporates which govern the Corporate Program. However, there are occasional instances in which you and Corporates enter into written agreements that refer to you making volunteering opportunities available to the staff of Corporates.

You also have other volunteers who assist you in your charitable enterprise (other than the Volunteers connected with the Corporates).

Relevant legislative provisions

All legislative references are to the GST Act:

• subsection 7-1(1)

• section 9-5

• subsection 9-17(2).

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