Edited version of your private ruling

Authorisation Number: 1012587492068

Ruling

Subject: GST Registration

Question

Are you required to register for goods and services tax (GST)?

Advice:

No

Relevant facts:

· You are not registered for GST.

· You are a non-profit entity and are endorsed as a charity for GST purposes.

· You carry on activities of a school parents and citizen organisation.

· You derive your income from selling food at the school canteen and selling uniforms.

· The food is not supplied to boarding school students

· You have made a decision to treat the sales of food at the school canteen as input taxed supplies. You have made a note of your decision in your records.

· The gross receipts from the sales of food at the school canteen are less than $150,000 per annum.

· The gross receipts from the uniforms sales are also less than $150,000 per annum.

· You conduct fund-raising activities to raise funds for your charitable purposes. The fund raising activities include fetes.

· You advised that you will make a note to treat supplies in relating to the fund-raising activities as input taxed supplies in your records before the start of the activities.

Reasons for decision

GST registration

Under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you are required to be registered for GST if:

· you are carrying on an enterprise; and

· your GST annual turnover meets the registration turnover threshold for GST.

Based on the information provided, you satisfy the first criterion as you are carrying on an enterprise of a school parents and citizen organisation. You sell food and uniforms at the school.

Next, we determine whether your GST turnover meets GST registration turnover threshold. You are a non-profit entity and endorsed as a charity for GST purposes. For your information, the current GST registration turnover threshold for a non-profit entity is $150,000.

GST turnover

Division 188 of the GST Act outlines the methods for working out your GST turnover. The methods to work out your GST turnover are explained in the Goods and Services Tax Ruling GSTR 2001/7. We enclose a copy for your reference.

Under subsection 188-10(1) of the GST Act, your GST turnover will meet the registration turnover threshold if:

(a) your current annual turnover is at or above the turnover threshold, and the Commissioner is not satisfied that your projected annual turnover is below the turnover threshold; or

(b) your projected annual turnover is at or above the turnover threshold.

In other words, if your current annual turnover is at or above the threshold but your projected annual turnover is below the threshold, you are not required to register for GST. However, if your projected annual turnover is at or above the threshold, you are required to register for GST even if your current annual turnover is below the threshold.

You work out your current annual turnover by adding the values of all your supplies (excluding the five types of supplies listed below) that you have made or are likely to make during the current month and previous 11 months.

You work out your projected annual turnover by adding the values of all your supplies (excluding the five types of supplies listed below) that you have made or are likely to make during this current month and the next 11 months.

The following supplies are excluded when working your current and projected annual turnover for GST purposes:

(a) supplies that are input taxed;

(b) supplies made for no consideration, other than to your associates who are not registered for GST or who are registered but who do not acquire the thing from you solely for a creditable purpose;

(c) supplies you make which are not part of your enterprise;

(d) supplies not connected with Australia; or

(e) the sale of capital assets (excluded from projected annual turnover only).

Based on information provided, we only need to consider whether your supplies are input taxed when working out your GST turnover. The other supplies are not relevant in your case.

Input taxed supply- supplies of food through the school canteen

You advised that you have made a decision to treat supplies of food at the school canteen as input taxed. Therefore, we have to consider whether your supplies of food at the school canteen are input taxed.

Subsection 40-130(1) of the GST Act states:

A supply of *food is input taxed if

(a) the supply is made by a non-profit body through a shop operating on the grounds of a *school that supplies *primary courses or *secondary courses; and

(b) the non-profit body chooses to have all its supplies of food through the shop treated as input taxed.

* denotes a defined term in the GST Act

You are a non-profit body and you supply food at the school canteen. You also confirmed that the food is not supplied to boarding school students. As you have made a decision to treat the supplies of food supplied at the school canteen as input taxed, your supplies are input taxed under subsection 40-130(1) of the GST Act. Therefore, your supplies of food at the school canteen are excluded when working out your GST annual turnover.

Please note: You treat your supplies of food at the school canteen as input taxed as long as you do not revoke your decision (to treat the supplies of food as input taxed). However, should you decide to revoke your decision the supplies of food at the school canteen would not be input taxed under section 40-130 of the GST Act. You are then required to include the value of these supplies when working out your GST turnover.

In addition, if you revoke your decision, paragraph 40-130(2)(b) of the GST Act provides that you are not able to choose to treat the supplies of food at the school canteen as input taxed within 12 months after the date of the revocation.

You may find more information on supply of food through a school canteen in the Australian Taxation Office (ATO) publication "Guide for non-profit organisations: Fundraising (NAT 13095).

Input taxed supply- fund-raising events conducted by charity

As you are endorsed as a charity for GST purposes, you may be eligible to treat supplies made in connection with fund-raising events as input taxed under Subdivision 40-F of the GST Act. Below is a general discussion of how fund-raising events are treated under the GST Act.

Section 40-160 of the GST Act provides for fund-raising events conducted by an endorsed charity. Subsection 40-160(1) of the GST Act provides that a supply is input taxed if:

· the supplier is an endorsed charity, a gift deductible entity or a government school

· the supply is made in connection with a fund-raising event

· the supplier chooses to have all supplies that it makes in connection with the event treated as input taxed, and

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

Subsection 40-165(1) of the GST Act describes what is meant by a fund-raising event. This subsection states:

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 the sale 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.

Note that the asterisks denote a defined term in the GST Act.

In making a decision to treat activities under paragraph 40-165(1)(c) of the GST Act as a fund-raising event, the Commissioner must be satisfied that the supplier is not in the business of conducting such events and the proceeds from conducting the events are for the direct benefit of the supplier's charitable or non-profit purposes.

In addition, the Commissioner has made a determination on 10 August 2001 cited as A New Tax System (Goods and Services Tax) Frequency of Fund-raising Events Determination (No. 1) 2001 that the frequency with which fund-raising events may be held without forming part of a series or regular run of like or similar events is fifteen (15) fund-raising events in any financial year.

Where you choose to apply subsection 40-160(1) of the GST Act to treat supplies made in relation to a fund-raising event as input taxed, you will need to make a note of your decision in your records prior to conducting the event and you will have to treat all supplies that you make in connection with the event as input taxed.

Sales of uniforms

We consider that the activities relating to your supplies of the school uniforms do not satisfy the definition of fundraising events listed in section 40-165 of the GST Act. Although the sales of uniforms are conducted for the purpose of raising funds for your organisation, these activities are done in the course of your business. Therefore, the sales of the uniforms are treated as normal business income and must be included when working your GST turnover. The gross receipts from the sales of uniforms sales must be included when working out your GST turnover.

Fetes

The activities relating to the fetes which you intend to undertake are similar to fund-raising events described in paragraph 40-165(1)(a) of the GST Act.

You have advised that you will make a note in your records, before the start of these events to treat the fetes as fund-raising event and treat the supplies as input taxed. Where you treat supplies relating to a fund-raising event under paragraph 40-165(1)(a) of the GST Act as input taxed, you do not have to include these supplies when working out your GST turnover.

In summary, you treat the supply of food at the school canteen as input taxed under section 40-130 of the GST Act. You advised that you will be treating supplies relating to the fetes as input taxed under section 40-160 of the GST Act. Therefore, you do not have to include these supplies when working out your GST turnover.

However, the supplies of uniforms are not input taxed and you have to include the sales of uniforms when working out your GST turnover. You advised that the total receipts of school uniforms sales are less than the GST turnover registration threshold, currently at $150,000. Therefore, you do not satisfy the criteria in section 23-5 of the GST Act and are not required to register for GST