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Ruling

Subject: GST and the supply of food at a sporting venue

Question

Is your supply (by way of sale) of food at your sporting events subject to goods and services tax (GST)?

Answer

Where the food is purchased and consumed inside the sporting area during your sporting events, its supply would be subject to GST.

Where the food is purchased then consumed outside the sporting area, its supply would be
GST-free.

Please refer to the relevant facts and reasons for decision as to what constitutes the sporting area.

Relevant facts and circumstances

· You are registered for GST.

· You sell food to players and supporters on the days the sporting events are held.

· The grounds where the sporting events are held include playing areas and viewing areas both around the playing areas and clubhouse (herein the playing and viewing areas and clubhouse will be known as the sporting area).

· The sporting area is bounded by main roads, access roads and by trees on some of the boundaries.

· The sporting area is part of a reserve.

· You have an agreement with the owners of the reserve that allows you the exclusive use of the playing and viewing areas on designated days and times to allow you to supply your sporting events.

· All of the grounds within the reserve, when not being used by you or other clubs, can be used by individuals or other organisations (such as schools) for recreational purposes.

· There are other game areas in the reserve that have clear recognisable boundaries.

· All of the playing area is enclosed by a fence. The clubhouse is outside this fence although it is enclosed by the access road which runs behind it.

· The general public is not prohibited from entering the sporting area when the events are being held and are free to walk around the outside of the playing areas.

· There is no barrier to prevent the general public from buying food or drinks from you, however it is your belief that sales to the general public make up a very small percentage of the overall sales.

· There is seating provided but there are no tables.

· The main purpose of the seats is to provide seating for people to watch the events, eat, drink and socialise.

· You have been selling the food as a GST-free supply and will adjust your activity statements if your supply of the food is subject to GST.

Relevant legislative provisions

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

Section 38-2

Section 38-3

Section 38-4

Section 195-1

Schedule 1 to the Taxation Administration Act 1953 (TAA)

Subsection 105-50(1)

Summary

The clubhouse and the playing and viewing areas can be considered as premises where food is consumed for the purposes of 38-5 of the GST Act. Consequently, when you sell food that is consumed in these areas, it will be subject to GST

Reasons for decision

A supply of food is GST-free under section 38-2 of the GST Act if the product satisfies the definition of food given in section 38-4 of the GST Act and is not excluded from being GST-free by section 38-3 of the GST Act.

However, under paragraph 38-3(1)(a) of the GST Act, a supply of a food is not GST-free if it is consumed on the premises from which it is supplied.

The purpose of paragraph 38-3(1)(a) of the GST Act is to ensure that all food supplied for consumption on the supplier's premises will be subject to GST. This is the case irrespective of whether the sale of the food item would otherwise be GST-free.

Premises

The term premises are defined in section 38-5 of the GST Act and includes in the definition:

· the place where the supply takes place

· the grounds surrounding a cafe or public house, or other outlet for the supply, or

· the whole of any enclosed space such as a football ground, garden, showground, amusement park or similar area where there is a clear boundary or limit.

Please note however that premises does not include any part of a public thoroughfare unless it is an area designated for use in connection with supplies of food from an outlet for the supply of food.

The ATO view on the meaning of premises for the purposes of section 38-5 of the GST Act is given by the Goods and Services Tax Determination GSTD 2000/4 (available from the website www.ato.gov.au ). Paragraph 1 of GSTD 2000/4 provides a list of premises that fall within the section 38-5 definition and includes any venues associated with leisure, sport or entertainment that have clear boundaries or limits.

Further, paragraph 3 of GSTD 2000/4 lists the type of venues that are normally associated with leisure, sport or entertainment. Other sports grounds are included in this list.

In your case, with reference to paragraphs 1 and 3 of GST 2000/4, during the times you have exclusive use of the playing and viewing areas, the sporting area becomes a sports ground for the purposes of your sale of food and drink.

Therefore, the sporting area can be considered as premises where food is consumed for the purposes of 38-5 of the GST Act. Consequently, when you sell food that is consumed in the sporting area, it will be subject to GST.

Other sporting activities held at the same time

Paragraph 5 of GSTD 2000/4 explains that where a supplier's premises are located within a larger general purpose site, as long as the larger site is not a venue associated with leisure, sport or entertainment then it is only the supplier's premises that are relevant.

The consequence of this paragraph is that the sporting area would also include any area where another club's sporting fixture is taking place at the same time.

Food consumed outside the sporting area

There is no barrier to prevent the general public from buying food from you then consuming the water outside the sporting area (albeit that you consider this to be a very small part of your sales).

The ATO view on this type of scenario is provided by GSTD 2000/5 (also available from the website). Paragraph 4 of GSTD 2000/5 provides that food will be GST-free if it is served in its original or takeaway form, that is, s not served in circumstances indicating that the consumption will take place on the premises.

Given the guidance of this paragraph, you are entitled to sell the food GST-free provided you are satisfied that consumption will take place outside the sporting area.

Four year rule

Please be aware that when making adjustments, subsection 105-50(1) of Schedule 1 to the TAA provides that any unpaid net amount, net fuel amount or amount of indirect tax (together with any relevant general interest charge under the TAA) ceases to be payable four years after it became payable. Indirect tax refers to any of the GST, luxury car tax, and wine equalisation tax. This is known as the four year rule.

Correcting GST mistakes

You may be able to correct the mistakes made on your next or subsequent activity statements provided you are within the correction limits. These limits are given in the enclosed fact sheet Correcting GST mistakes. Where a mistake from a previous activity statement is outside these limits, you must then revise the original activity statement that the mistake occurred in.