Edited version of private ruling

Authorisation Number: 1011595943795

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Ruling

Subject: GST on entry fees, green fees and raffles

Questions

1. Are entry fees paid by members for the right to participate in a championship event consideration for taxable supplies of member's right to participate in an event?

Answer: Yes.

The entry fees are consideration for taxable supplies of right to participate in a championship under section 9-5(a) of the GST Act. As the supply of right to participate in the championship event is a taxable supply, GST is applicable on the entry fee.

2. Are green fees paid by members for the right to play games on the greens consideration for taxable supplies of the right to play on the greens?

Answer: Yes.

The green fees are consideration for taxable supplies of the right to play on the greens under section 9-5(a) of the GST Act. As the supply of the right to play on the greens is a taxable supply, GST is applicable on the green fee.

3. Are the supplies (sales) of the raffle tickets a taxable supply under the GST Act?

Answer: Yes.

The supplies (sales) of raffle tickets are taxable supplies under section 9-5 of the GST Act and are subject to GST.

Relevant facts

You are a non-profit organisation and are registered for GST.

You hold championship events for which you charge and receive an entry fee.

Members pay an entry fee to enter championship events and the proceeds are paid out as prize money.

The members also pay a green fee for each game played.

You also conduct raffles from which part of the proceeds is expended on prizes.

Reasons for decision

Question 1 - Entry Fee

GST is payable on taxable supplies. Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) 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.

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

'Supply' is defined in section 9-10 of the GST Act which provides that 'a supply is any form of supply whatsoever' and includes the creation or grant of a right. By accepting an entry into an event, an event holder is supplying a right to participate in the event.

'Consideration' is defined in the GST Act to include a payment or any act or forbearance in connection with a supply of anything. The payment of a fee to compete in a sports event represents consideration for a supply by the sports club or organisation of the right to participate in the event.

Goods and Services Tax Ruling GSTR 2002/3 discusses prizes and participation in an event and is available at www.ato.gov.au . Paragraph 26 to 28 of GSTR 2002/3 state:

Supply by the event holder - the right to participate in the event

26. By accepting an entry into an event, an event holder is supplying a right to participate in the event. Intending participants may be required to formally enter the event by completing an entry form and paying an entry fee.

27. The supply that is made by the event holder may include other things in addition to the right to participate, such as use of facilities, entry to functions or items of clothing.

28. The supply of a right to participate in an event includes a contingent right to a prize. In order to claim the prize however, a participant must provide something additional to the entry fee, that is, participation or performance to a standard required by the conditions of the event.

An example of the GST implications of a right to compete in a sporting event is stated at paragraph 35 and is set out below:

Example 1: Supply of right to participate in the event

35. Rod is a professional golfer and is registered for GST. He enters a tournament being run by event holder, Golfers Unlimited (GU). He completes an entry form and pays an entry fee of $55. GU's supply to Rod of a right to participate in the event is a taxable supply for consideration of $55. The price of the supply is the consideration of $55. GU accounts for $5 GST payable, being 1/11 of the price. Rod is entitled to an input tax credit of $5 for the creditable acquisition of GU's supply.

In this case, you are supplying a championship event. By accepting an entry into the event, you are supplying the participant a right to participate in the championship event. The supply of a right to participate in the championship event includes a contingent right to a prize.

The payment of an entry fee by the participants to compete in the championship event represents consideration for your supply. Therefore, you are making a supply in the form of an entitlement to enter the championship event and receive consideration for that supply. Thus section 9-5(a) of the GST Act is satisfied.

You are registered for GST and the supply of the right is made in Australia in the course of carrying on your enterprise. There are no provisions in the GST Act under which the supply of the right is a GST-free or an input taxed supply. Therefore the other requirements of section 9-5 of the GST Act are also satisfied. Accordingly, your supply of right is a taxable supply under section 9-5 of the GST Act. The entry fee is consideration for the supply of right to participate in the championship event and therefore GST is applicable on the entry fee.

Question 2 - Green Fees

As discussed in Question 1 above, the payment of a fee to participate in a competition will be subject to GST as it is consideration payable for a supply made by the entity, being the right to enter the competition.

Green fees generally represent an amount charged for a right (being the right to participate in a competition or the right to play on the greens). Therefore the payment of the green fee to the entity is subject to GST as it is consideration payable for a supply made by the entity, being the right to play on the greens.

Question 3 - Raffles

Generally GST is payable on any gambling supplies that you make. Under section 126-35 of the GST Act a gambling supply is a taxable supply involving:

· the supply of a ticket in a lottery, raffle or similar activity, or

· taking bets on gambling events such as racing, gaming or sporting events.

As discussed in Question 1 above, an entity makes a taxable supply if all the requirements of section 9-5 of the GST Act are satisfied.

In this case, you make the supplies (sales) of the raffle tickets for consideration and in the course of your enterprise. The supplies are connected with Australia and you are registered for GST at the time of the supplies. As such, the requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act are satisfied. Your supplies of raffle tickets are taxable to the extent that it is not GST-free under Division 38 of the GST Act or input taxed under Division 40 of the GST Act.

Under section 38-270 of the GST Act, a supply is GST-free if:

· the supplier is a charitable institution, a trustee of a charitable fund, a

· gift-deductible entity or a government school; and

· the supply is:

o a supply of a ticket in a raffle, or

o an acceptance of a persons participation in a game of bingo, or

o a gambling supply of a kind specified in the regulations; and

· the supply does not contravene a State law or a Territory law.

Your supplies of raffle tickets are not GST-free under section 38-270 of the GST Act, as you do not fall within one of the stipulated types of entity to which that section applies in particular, you are not a charitable institution.

Section 40-160 of the GST Act, however, provides that a supply is input taxed if:

· the supplier is a charitable institution, a trustee of a charitable fund, a gift-deductible entity or a school, and

· the supply is made in connection with a fund-raising event, and

· the supplier chooses to have all supplies that it makes in connection with the event treated as input taxed; and

· the event is referred to in the suppliers records as an event that is treated as input taxed.

As you are not a charitable institution you do not have the option to operate the raffles as input taxed fund-raising events under Subdivision 40-F of the GST Act.

In conclusion, your supply of raffle tickets is taxable under section 9-5 of the GST and is subject to GST.