Edited version of your private ruling

Authorisation Number: 1012469282651

Ruling

Subject: GST and fundraising events

Question 1

Is fundraising event 1 subject to GST?

Answer

Donations of $X and $Y are not subject to GST. Donations of $Z are subject to GST.

Please refer to Reasons for Decision.

Question 2

Is event 2 subject to GST?

Answer

Yes. Please refer to Reasons for Decision.

Question 3

Is event 3 subject to GST?

Answer

Yes.

However you may choose to treat event 3 as an input taxed fundraising event. If you choose to treat event 3 as an input taxed fundraising event, GST will not apply to the event and input tax credits will not be available.

Please refer to Reasons for Decision.

Relevant facts and circumstances

You are an endorsed Deductable Gift Recipient and Income Tax Exempt Charitable Entity.

You are endorsed as a charity for GST purposes.

You are registered for GST.

You do not conduct more than 15 fundraising events in any income year.

The following events are planned by you:

· Event 1

· Event 2

· Event 3

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5

A New Tax System (Goods and Services Tax) Act 1999 Subsection 9-17(2)

A New Tax System (Goods and Services Tax) Act 1999 Section 11-5

A New Tax System (Goods and Services Tax) Act 1999 Section 40-160

A New Tax System (Goods and Services Tax) Act 1999 Section 40-165

A New Tax System (Goods and Services Tax) Frequency of Fund-raising Events Determination (No. 1) 2001

Reasons for decision

Question 1

Summary

Event 1

Under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), donations of $X and $Y will not be regarded as consideration for taxable supplies and therefore you will not be making taxable supplies. As you are not making taxable supplies there will be no GST payable in relation to these donations. We consider these donations to be gifts.

However, we regard the donations of $Z as consideration for a taxable supply and therefore GST will apply. You will be required to remit 1/11th of the consideration that you receive as GST to the Tax Office.

Detailed reasoning

Donations of $X and $Y

Subsection 9-17(2) of the GST Act provides that gifts to a non-profit body are not the provision of consideration. It follows that you are not making a taxable supply. As you are not making taxable supplies, GST does not apply.

Donations of $Z

Under the GST Act, you are liable to remit GST on any taxable supplies that you make. Section 9-5 of the GST Act states:

You make a taxable supply if:

(a) you make a 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, for GST.

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

Note: the asterisks denote a defined term, but do not change the meaning of the wording.

You will receive $Z donations. In return the donors receive goods and rights which, in total, is considered to be of material benefit and therefore a supply, not a gift. As all the elements of a taxable supply under section 9-5 of the GST Act are satisfied, you are making a taxable supply and you will be required to remit 1/11th of the consideration that you receive as GST to the Tax Office. Please refer to "Input Tax Credits" discussed below.

You may wish to ask the Commissioner to decide if the event 1 can be treated as a fundraising event that is input taxed under paragraph 40-165(1)(c) of the GST Act. Please refer to "Input Taxed Fundraising Events" discussed below.

Question 2

Detailed reasoning

Event 2

In relation to event 2, you are not organising a fundraising event, but are entering as a participant in an event organised by another independent entity.

In return for contributions donors will receive advertising. If a significant amount is provided, a donor's will receive more prominent advertising.

As all the elements of a taxable supply under section 9-5 of the GST Act are satisfied, you have made a taxable supply of goods to the donors, and the money received in relation to the goods and services provided is regarded as consideration for that taxable supply, not a gift. You will be required to remit 1/11th of the consideration that you receive as GST to the Tax Office. Please refer to "Input Tax Credits" discussed below.

Question 3

Detailed reasoning

Event 3

In relation to event 3, you will be selling tickets to this event and the price charged is consideration for a taxable supply where the person attending is receiving a material benefit. GST will apply and you will be required to remit 1/11th of the consideration that you receive as GST to the Tax Office. Please refer to "Input Tax Credits" discussed below.

You may choose to treat event 3 as a fundraising event that is input taxed, provided you make a note of your decision to do so, in your records prior to the event being held. Where you choose to treat event 3 as an input taxed fundraising event, you will not be required to charge GST on all supplies you make in relation to this event. In addition, you will not be entitled to claim input tax credits for any acquisitions you make in connection with event 3.

You are not obliged to treat event 3 as an input taxed fundraising event. Section 40-160 of the GST Act allows you the choice to do so. Please refer to "Input Taxed Fundraising Events" discussed below.

Input Tax Credits

You will be entitled to claim input tax credits for GST paid on any creditable acquisitions you have made in relation to the above taxable supplies, namely events 1,2 & 3, under section 11-5 of the GST Act which states:

You make a creditable acquisition if:

(a) you acquire anything solely or partly for a *creditable purpose;

(b) the supply of the thing to you is a *taxable supply;

(c) you provide, or are liable to provide, *consideration for the supply; and

(d) you are *registered, or *required to be registered.

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 making an input taxed supply or it is private or domestic in nature.

Input Taxed Fundraising Events

Subdivision 40-F of the GST Act covers fundraising events conducted by charities.

Section 40-160 of the GST Act provides for fundraising events that are treated as input taxed. This section states:

A supply is input taxed if:

(a) the supplier is an *endorsed charity, a *gift-deductible entity or a *government school; and

(b) the supply is made in connection with a *fund-raising event; and

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

(d) the event is referred to in the supplier's records as an event that is treated as input taxed.

Under section 40-160 of the GST Act, you may choose to treat certain fundraising events conducted by you as input taxed. If you treat all supplies that you make in connection with those events input taxed, you are not required to remit GST on all supplies made in connection with those particular events. However, you will not be entitled to claim input tax credits on acquisitions made in connection with those particular events. Each fundraising event must be considered separately.

Section 40-165 of the GST Act sets out the types of events that are considered to be fundraising events. It states:

(1) Any of these is a fund-raising event if it is conducted for the purpose of fund-raising and it does not form any part of a series or regular run of like or similar events:

(a) a fete, ball, gala show, dinner, performance or similar event;

(b) an event comprising sales of goods if:

(i) each sale is for a *consideration that does not exceed $20 or such other amount as the regulations specify; and

(ii) selling such goods is not a normal part of the supplier's *business;

(c) an event that the Commissioner decides, on an application by the supplier in writing, to be a fund-raising event.

In relation to event 3, we consider that this event falls within the definition of a 'similar event' to a 'dinner', covered by paragraph (a) of subsection 40-165(1) of the GST Act. Consequently, you may choose to treat this particular event as an input taxed fundraising event in accordance with section 40-160 of the GST Act, provided you make a note of your decision to do so, in your records prior to the event being held. You are not obliged to treat it as such, and the Commissioner does not need to decide for you.

Event 1 is not the type of event covered by paragraphs (a) or (b) of subsection 40-165(1) of the GST Act. Therefore, the Commissioner will need to decide if it is a fundraising event of the type covered by section 40-165 of the GST Act. Please refer to our separate correspondence in relation to this matter.

Event 2 is not a fundraising event organised by you and thus sections 40-160 and 40-165 of the GST Act do not apply.

Further information regarding input taxed fundraising events can be found in the Charities Consultative Committee Resolved Issues document which is available on our website. The path is: www.ato.gov.au / Your industry type / Business / Charities and non-profit organisations / Industry issues / Charities Consultative Committee Resolved Issues Document / Part 4 - Fundraising, Gifts and Donations.