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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012475615593

Ruling

Subject: GST and various questions pertaining to a non profit organisation

Question 1

Is the supply of membership by an organisation (you) to your employees subject to goods and services tax (GST)?

Answer

Yes.

Question 2

Is the supply of various good and services by you (eg sports tickets, cinema tickets, entertainment books, etc) to your employees subject to GST?

Answer

Yes.

Question 3

Is bank interest received by you subject to GST?

Answer

No.

Relevant facts and circumstances

    · You are registered for GST.

    · You are a non profit body for GST purposes.

    · Your main purpose is to conduct and promote social and recreational activities amongst your members and to raise funds for charities.

    · You pay membership fees. The payment of this fee provides members with access to various goods and services.

    · Amongst other things, you provide goods and services to members at a discounted rate and include various other items at reduced prices.

You do not provide any goods or services to non-members.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 7-1

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

A New Tax System (Goods and Services Tax) Act 1999 Section 9-10

A New Tax System (Goods and Services Tax) Act 1999 Sub-section 9-10(2)

Reasons for decision

Question 1

Is the supply of membership by you to your employees subject to goods and services tax (GST)?

Detailed reasoning

Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), provides that you are liable for GST in respect of any taxable supply that you make.

Under section 9-5 of the GST Act, an entity makes a taxable supply if:

    · it makes a supply for consideration

    · the supply is in the course or furtherance of an enterprise that it carries on

    · the supply is connected with Australia, and

    · the entity is 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.

Membership fees

Generally, membership fees are payments in return for services or rights and will be subject to GST if they satisfy the criteria for a taxable supply. Membership also bestows rights to members even where nothing tangible is supplied.

Based upon the information you have supplied, your membership is

    · made for consideration (payment)

    · made in the course of your enterprise

    · is connected with Australia, and

    · you are registered for GST.

Furthermore, there are no specific provisions in the GST Act that allow the supplies made in return for your memberships fees to be treated as a GST-free or input taxed supply. There are some GST concessions that may be available to endorsed charities, gift-deductible entities, and government schools however you are not one of these type of entities therefore can not access these concessions.

Therefore the supply of your membership fees will be subject to GST and you are liable for 1/11th of the membership fees as GST.

Question 2

Is the supply of various goods or services (eg admission tickets to sporting events, cinema tickets, entertainment books, etc) by you to your employees subject to GST?

As explained in Question 1, where the requirements of section 9-5 of the GST Act are satisfied, then the supply of goods or services will generally be taxable supplies and therefore subject to GST.

For GST purposes, we need to look at whether there is a supply being made (in this case by a non-profit organisation) and if consideration is received in return for the supply.

Supply for Consideration

The existence of a 'supply' itself is an essential element in determining whether a transaction is a taxable supply under section 9-5 of the GST Act.

The definition of supply is covered under section 9-10 of the GST Act.

Paragraphs 9-10(2)(a), (b) and (g) of the GST Act provides that a supply includes:

    (a) a supply of goods

    (b) a supply of services…

    (g) an entry into, or release from, an obligation:

    (i) to do anything, or

    (ii) to refrain from an act, or

    (iii) to tolerate an act or situation…

In your case, the services and/or sale of goods that you provide to your members are considered to be a 'supply' for GST purposes.

You also charge a fee to your members for the supplies that you make to them which are in the course of carrying on your enterprise. The payments from your members will be consideration for these supplies (that are also made in Australia). Therefore as you are registered for GST purposes, these supplies are taxable supplies (to the extent that they are not GST-free or input taxed) and will be subject to GST.

Question 3

Is bank interest received by you subject to GST?

There is no GST payable on interest received from a bank as it is considered to be a financial supply that is input taxed. The provision, acquisition or disposal of an interest in a bank account or credit account is a financial supply under items 1 and 2 of subregulation 40-5.09(3) of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).


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