Edited version of your private ruling

Authorisation Number: 1012500526749

Ruling

Subject: GST and annual memberships fees

Question 1

Is GST payable by you under section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where your members pay the local chapter annual membership fee (which is currently a certain amount of money)?

Answer

Yes, GST is payable by you under section 9-40 of the GST Act where your members pay the local chapter annual membership fee.

Question 2

When do you attribute your GST liability on the local chapter annual membership fee?

Answer

You attribute your GST liability on the local chapter membership fee to the tax period in which the overseas parent receives this fee.

Relevant facts and circumstances

You registered for GST

You account for GST on a cash basis.

The association is an independent, non-profit global association engaged in the development, adoption and use of globally accepted, industry-leading knowledge and practices for a certain thing. The association's international headquarters are overseas. The association has more than a certain number of constituents worldwide.

When joining or renewing membership of the association, members are required to also join a local chapter where one exists in close proximity to their location of residence.

You are an incorporated association and are the local chapter for association members residing in Australia.

The association's annual membership fees are paid by members directly to the overseas parent; they are not directly collected by local chapters. The membership fees are comprised of two components - the overseas parent membership fee (currently a certain amount of money per annum) and a smaller membership fee for the local chapters (currently a certain amount of money per annum for those located in Australia). These fees are assessed and collected by the overseas parent.

The Australian chapter's membership fees are held in a certain country dollar account by the overseas parent and may be drawn down by the Australian chapter when required for specific purposes. There may be a several year delay between members paying their fees to the overseas parent and the Australian chapter drawing down those funds. Some of the funds may never be drawn down and may remain with overseas parent, but allocated to the Australian chapter.

Your role is sponsoring local educational seminars and workshops, conducting regular chapter meetings, and helping to further promote and elevate the visibility of the profession throughout Australia.

You are based in Australia, and you operate in Australia, only.

Relevant legislative provisions

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

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

A New Tax System (Goods and Services Tax) Act 1999 subsection 9-25(5)

A New Tax System (Goods and Services Tax) Act 1999 subsection 9-40

A New Tax System (Goods and Services Tax) Act 1999 paragraph 29-5(2)(a)

Reasons for decisions

Question 1

Summary

GST is payable on the membership fees in question because:

· these fees are consideration for supplies that you make

· you make these supplies in the course or furtherance of an enterprise that you carry on

· these supplies are connected with Australia

· you are registered for GST, and

· these supplies are not GST-free or input taxed

Detailed reasoning

In accordance with subsection 7-1(1) of the GST Act, GST is payable on taxable supplies

In accordance with section 9-40 of the GST Act, you must pay the GST on any taxable supply that you make.

You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states:

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.

(*Denotes a term defined in section 195-1 of the GST Act)

You are supplying various services to local chapter members in return for the local chapter membership fee (the certain amount of money), including, promoting and elevating the visibility of the profession throughout Australia.

You supply these services for consideration, that is, the local chapter membership fee.

Hence, you meet the requirement of paragraph 9-5(a) of the GST Act.

You supply these services in the course or furtherance of an enterprise that you carry on. Hence, you meet the requirement of paragraph 9-5(b) of the GST Act.

Subsection 9-40(5) of the GST Act states:

A supply of anything other than goods or *real property is connected

with Australia if:

(a) the thing is done in Australia; or

(b) the supplier makes the supply through an *enterprise that the supplier *carries

on in Australia; or

(c) all of the following apply:

(i) neither paragraph (a) nor (b) applies in respect of the

thing;

(ii) the thing is a right or option to acquire another thing;

(iii) the supply of the thing would be connected with

Australia.

You are supplying services, which is something other than goods or real property.

The supplies of your services to members are connected with Australia because you perform these services in Australia, and you supply these services through an enterprise that you carry on in Australia. Therefore, the supplies of these services are connected with Australia. Hence, you meet the requirement of paragraph 9-5(c) of the GST Act.

You are registered for GST. Hence, you meet the requirements of paragraph 9-5(d) of the GST Act.

There are no provisions of the GST Act under which you supplies of services in return for the membership fees are GST-free or input taxed.

Therefore, as all of the requirements of section 9-5 of the GST Act are met, you are making taxable supplies in return for the membership fees in question. Hence, GST is payable on these membership fees.

Question 2

In accordance with paragraph 29-5(2)(a) of the GST Act, a taxpayer that accounts for GST on cash basis attributes its GST liability on a supply to the tax period in which it receives the consideration for the supply.

You account for GST on cash basis. Therefore, you attribute the GST on the membership fee in question to the tax period in which that consideration is received. We consider that consideration is received when the overseas parent receives the membership fee because it collects and holds the membership fee on your behalf. Hence, you attribute the GST to the tax period in which the overseas parent receives the membership fee.

Goods and Services Tax Ruling GSTR 2001/2 explains how to convert amounts of consideration that are expressed in foreign currency into Australian currency for GST purposes. This can be found on the Australian Taxation Office website, www.ato.gov.au or on an internet search engine.