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Ruling
Subject: GST & Supply for No Consideration
1. Does Entity A make a taxable supply when it receives money from Entity B for Entity C to supply airline tickets as part of a tour package and for incidental costs for services supplied by other Entities?
2. Does the money received from Entity B for a Entity C to supply airline tickets as part of a tour package and for incidental costs for services supplied by other Entities form part of Entity A's registration turnover threshold?
Answers
1. No.
2. No.
Relevant facts and circumstances
Entity A is an incorporated not for profit entity which is not currently registered for GST due to its GST registration turnover being below $150,000.
Entity A's mandate is to promote a particular activity.
Entity A collected funds for Entity B to travel overseas and did not charge Entity A fee for this service. Entity C issued airline tickets to Entity A.
Entity A was not an associate of any entity.
Reasons for decision
Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) requires you to pay GST on any taxable supply you make.
Section 9-5 of the GST Act duly defines taxable supplies as follows:
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.
(Terms marked with an *asterisk are defined at section 195-1 of the GST Act).
Subsection 9-10(2) of the GST Act provides that a supply includes a supply of services.
Entity C and Entity D services were provided to Entity B and not Entity A. Entity A was therefore, merely operating as an intermediary or coordinator to ensure that these services were efficiently received and paid by Entity B.
It follows from this that Entity A provided Entity B with a service. For this service, Entity A did not charge Entity B. Accordingly, whilst Entity A made a supply of services to Entity B this supply was made for no consideration. Therefore, Entity A did not make any taxable supply and has no GST exposure in relation to this transaction. Consequently, this particular event has no bearing on Entity A's GST registration turnover. This is because, subsections 188-15(1) and 188-20(1) of the GST Act which deal with calculations of current and projected GST turnover respectively, excludes amongst other things supplies that are not made for consideration.