Edited version of your private ruling

Authorisation Number: 1012424950690

Ruling

Subject: GST on sporting memorabilia

Question 1

Do you need to remit GST for goods sold at an auction that you facilitate on behalf of a vendor?

Answer

No.

This ruling applies for the following periods:

The scheme commences on:

Relevant facts and circumstances

· You are registered for GST.

· You facilitate auctions of behalf of various entities.

· You carry a portable EFTPOS machine and collect almost all live action proceeds.

· You distribute the auction proceeds to the various entities. You retain a portion of proceeds as your fees or payment for conducting the auction.

· The various entities may or may not be registered for GST.

· Sometimes you do not know if the various entities are registered for GST.

· The auction event is conducted by the various entities.

· An entity may be present on occasions and you also facilitate the items they have put up for auction in the course of the fundraising event.

· At times you personally pay for the services of an entity to attend a fundraising event.

· You have difficulty, post auction time, in determining what portion of taxable or GST free sales have been made.

· So far, on your accountant's advice, you have been declaring GST on sales on behalf of entities that are registered for GST.

Relevant legislative provisions

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

Section 9-5

Section 9-70

Section 9-40

Section 29-10

Section 153-15

Reasons for decision

Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you must pay the GST payable on any taxable supply that you make.

As you are merely facilitating the auction you are not the vendor of the goods. In your circumstances the vendor is the entity making the sale or supply of goods. As you do not supply the goods you do not have any GST liability for those goods.

You are acting as an agent for the vendor and therefore their circumstances will determine whether GST is included in the auction closing price.

Where the vendor is not registered for GST then there is no taxable supply by the vendor when the goods are sold (as it is a requirement of section 9-5 of the GST Act that to make a taxable supply you must be registered for GST). This means that GST cannot be added onto the winning bid.

If the vendor is registered for GST they may make a taxable supply where all the requirements of section 9-5 of the GST Act are met. The vendor is then responsible for remitting any GST payable on the auction sale proceeds to the ATO.

The GST registered vendor is generally also responsible for issuing tax invoices on taxable supplies that they make to the winning bidders, unless you agree with them that you will issue tax invoices to the winning bidder as the vendor's agent (see section 153-15 of the GST Act). However, only one entity can issue tax invoices for the particular sale.

Unless bidders have been advised otherwise at the commencement of the auction or in the bidding terms and conditions (such as by being advised that an additional amount is payable for GST) the bids made will already include GST payable (if any). Where this is the case, this means that any GST payable will not be added onto the winning bid but is already included in the amount bid. As stated above, the GST registered vendor is responsible for remitting any GST payable on the auction sale proceeds to the ATO.

Taxable supplies that you make

You make supplies to the vendor when you provide the facilitation services in relation to the auctions. Your supply of services will be a taxable supply as you make the supply for consideration (payment), the supply is made in the course of your enterprise and you are registered for GST.

As you are making taxable supplies of facilitation services your fees will be subject to GST. It does not matter whether the entity conducting the auction is registered for GST or not, nor whether it is a charity. Your fees will be subject to GST in all cases, and you must pay the GST payable on the taxable supplies that you make.

Creditable acquisitions that you make

When you arrange and pay for the services of a GST registered entity, you must hold a tax invoice from them in order to claim input tax credits for that acquisition as is required under section 29-10 of the GST Act.

Where the entity is not registered for GST they do not make a taxable supply to you. No input tax credits can be claimed as you are not the recipient of a taxable supply.

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