Edited version of private advice

Authorisation Number: 1051511344423

Date of advice: 31 May 2019

Ruling

Subject: Entitlement to register for GST

Question 1

Are you entitled to register for Goods and Services Tax (GST) if you are not registered with the Australian Charities and Not-for-profits Commission (ACNC)?

Answer

Yes.

Question 2

Are you entitled to register for GST if you are registered with the ACNC?

Answer

Yes.

Question 3

If the answer to question 1 and 2 is yes, can you register for GST effective from 1 January 2019?

Answer

Yes.

Question 4

If you register for GST, will you make creditable acquisitions when you engage a builder and others for the purposes of constructing your new religious building and office facilities?

Answer

Yes, as long as the things supplied to you were taxable supplies and you were registered or required to be registered for GST at the time.

Question 5

If you register for GST, will you make creditable acquisitions solely for a creditable purpose when you engage a builder and others for the purposes of constructing your new religious building and office facilities?

Answer

Yes, as long as the things supplied to you were taxable supplies and you were registered or required to be registered for GST at the time.

Question 6

If you register for GST but you are not registered with the ACNC, will you make taxable supplies that are subject to GST when you receive donations from your members?

Answer

No.

Question 7

If you register for GST and you are registered with the ACNC, will you make taxable supplies that are subject to GST when you receive donations from your members?

Answer

No.

This ruling applies from 1 January 2019 onwards.

Relevant facts and circumstances

·  You are a not-for-profit (NFP) organisation.

·  Your GST turnover is currently below the registration turnover threshold for NFP organisations of $150,000.

·  You are currently not registered or required to be registered for GST.

·  Your activities, which are charitable in nature, consist of providing religious services and advancement of religion.

·  Your organisation came into existence many years ago and you first commenced your charitable activities then.

·  Your constituent documents provide your religious building will be open at all times for your members and shall never be closed except with the approval of your committee.

·  You do not undertake any other activities, charitable or otherwise, and you do not make any input taxed supplies.

·  Your activities are funded by donations from your members. The donations that you receive are your only form of income.

·  You provide nothing in return for the donations that you receive; they are gifts and there is no obligation on you, binding or otherwise, to do anything, refrain from doing anything, or to tolerate anything in connection with receiving the donations.

·  You are not registered as a charity with the ACNC and you are not an endorsed charity for GST purposes.

·  You are intending to redevelop your existing religious building by building a new religious building together with office facilities for the administrative and religious personnel.

·  You intend to engage with a builder or a number of builders for this purpose. You will provide consideration to the builder(s) and others for the construction of your new religious building and office facilities.

·  You intend to register for GST.

·  You are considering whether or not to register as a charity with ACNC.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

Section 9-5

Section 9-17

Section 9-20

Section 11-5

Section 11-15

Section 23-10

Section 25-10

Reasons for decision

In these Reasons for Decision, unless otherwise stated:

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

·  all terms marked by an *asterisk are defined terms in the GST Act.

Summary for questions 1 and 2: GST Registration

As you are carrying on an enterprise, you are entitled to register for GST.

Detailed reasoning for questions 1 and 2: GST Registration

You are currently not registered for GST and are not required to be registered for GST as your GST turnover is below the registration turnover threshold for NFP organisations of $150,000.

Section 23-10 provides who may be registered:

·  you may be *registered under this Act if you are carrying on an *enterprise (whether or not your *GST turnover is at, above or below the *registration turnover threshold).

·  you may be *registered under this Act if you intend to carry on an *enterprise from a particular date.

Your entitlement to voluntarily register for GST is determined by whether or not you are carrying on an enterprise, rather than by whether or not you are registered as a charity with the ACNC.

Being registered or not as a charity with the ACNC does not affect your entitlement to register for GST; however additional GST concessions are available to ACNC registered charities that are also endorsed by us as a charity.

If you, as a NFP organisation, choose not to register as a charity with the ACNC, you cannot apply for endorsement with us and you will thus not be eligible for the additional GST concessions.

The term 'enterprise' is defined in section 9-20 to include, among other things, an activity or series of activities done:

·  in the form of a *business; or

·  in the form of an adventure or concern in the nature of trade; or

·  by a charity.

Your constituent documents provide your religious building will be open at all times, only closed upon approval of your committee.

Your activities consist of providing religious services and advancement of religion on a continuous basis.

Based on the facts you have provided, we are satisfied that your activities amount to an enterprise. As such, you are entitled to register for GST should you wish to do so.

Summary for question 3: Date of effect of GST registration

You may voluntarily register for GST effective from 1 January 2019 as the date is not a date that occurred more than four years ago and you have continued to carry on your enterprise from at least that date.

Detailed reasoning for question 3: Date of effect of GST registration

Subsection 25-10(1) provides that the Commissioner must decide the date from which your GST registration takes effect, or took effect. However, paragraph 25-10(1)(b) provides that if you applied for registration, the date of effect must not be a day before: the day specified in your application; or if the Commissioner is satisfied that you became required to be registered on an earlier day - the day the Commissioner is satisfied is that earlier day.

As you are not required to register for GST, the effective date of your GST registration can be the date that you have specified as long as that date is not a day that occurred more than four years ago (refer to subsection 25-10(1A) which deals with backdating GST registration).

Law Administration Practice Statement 2011/8: Registration of entities (PS LA 2011/8) provides the Australian Taxation Office's (ATO) view on backdating GST registration. Paragraph 53 and 54 provide as follows:

The Commissioner may backdate an entity's GST registration, subject to the following limitations:

·  Where no registration application is made, the date of effect cannot be before the day on which the entity became required to be registered.

·  Where the entity applies for registration, the date of effect cannot be before the date the entity specified in the application, unless the Commissioner is satisfied that the entity was required to be registered as of an earlier date.

If an entity's GST registration is backdated it will result in the entity being required to pay GST on taxable supplies and taxable importations made from that earlier date. The entity will be entitled to claim input tax credits on creditable acquisitions or importations from the earlier date, provided the appropriate documentation is held. However, for tax periods that commence on or after 1 July 2012, the Commissioner cannot backdate the date of effect to a date that is more than four years before the date on which the Commissioner decides the date of effect of the entity's registration.

Therefore, since you are not currently required to be registered for GST but you have continued to carry on an enterprise for many years, you can voluntarily register for GST effective from 1 January 2019 as that date is not a date that occurred more than four years ago.

Summary for questions 4 and 5: Creditable acquisitions

As long as the things supplied to you were taxable supplies and you were registered (or required to be registered) for GST at the time, then your acquisitions in respect to the construction of your new religious building and office facilities would be creditable acquisitions made solely for a creditable purpose.

Detailed reasoning for questions 4 and 5: Creditable acquisitions

Section 11-5 provides that you make a creditable acquisition if:

·  you acquire anything solely or partly for a *creditable purpose; and

·  the supply of the thing to you is a *taxable supply; and

·  you provide, or are liable to provide, *consideration for the supply; and

·  you are *registered or *required to be registered.

Section 11-15 provides in part as follows in relation to the meaning of creditable purpose:

·  you acquire a thing for a creditable purpose to the extent that you acquire it in *carrying on your *enterprise.

·  however, you do not acquire a thing for a creditable purpose to the extent that:

·  -the acquisition relates to supplies that would be *input taxed; or

·  -the acquisition is of a private or domestic nature.

You intend to register for GST effective from 1 January 2019.

You will provide consideration to builder(s) and others for the construction of your religious building and office facilities, which will be used by you in carrying on your enterprise.

As you do not make input taxed supplies, none of your acquisitions would relate to making supplies that would be input taxed; nor would any of the acquisitions in respect of the construction of your new religious building and office facilities be of a private or domestic nature.

Therefore, as long as you are registered for GST at the time of making the abovementioned acquisitions and the things supplied to you were taxable supplies, the acquisitions will be creditable acquisitions made solely for a creditable purpose.

Summary for questions 6 and 7: Donations

Since you have no binding obligations to do anything in recognition for the donations and there is no expectation on the part of the donors to receive anything in return for the donations, you are not making taxable supplies in connection with your receipt of the donations.

Detailed reasoning for questions 6 and 7: Donations

Section 9-5 provides you make a taxable supply if:

·  you make the supply for *consideration; and

·  the supply is made in the course or furtherance of an *enterprise that you *carry on; and

·  the supply is *connected with the indirect tax zone; and

·  you are *registered, or *required to be registered.

However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

The first requirement for a taxable supply is that you make the supply for consideration. As you do not provide any consideration for the donations, you are not making taxable supplies in connection with your receipt of the donations.

Further, subsection 9-17(2) provides that making a gift to a non-profit body is not in the provision of consideration. It follows that if there is a gift to a non-profit body there will not be a taxable supply, unless there is another supply made for the consideration (gift); which is not the case here.

A "gift" or "donation" is not defined in the GST Act. Paragraph 13 of Taxation Ruling 2005/13 Income tax: deductible gifts - what is a gift (TR 2005/13) provides the ATO's view on the characteristics of gifts, as follows:

·  there is a transfer of the 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 by way of return.

For a payment to be considered a gift it must be unfettered, that is, there must be no obligations to do anything in recognition of the gift and no expectation on the part of the donor to receive anything in return for the donation.

Since you have no binding obligations to do anything in recognition for the donations and there is no expectation on the part of the donors to receive anything in return for donations, you are not making taxable supplies in connection with your receipt of the donations.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).