| Disclaimer This edited version has been archived due to the length of time since original publication.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 written advice
Authorisation Number: 1012665101917
Ruling
Subject: GST and calculation of Global GST amount
Question
Should the supply of the free ticket as a prize be included in total monetary prizes under section 126-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when calculating the global GST amount?
Answer
No
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
• You hold an exclusive operating licence for a Government Lottery.
• You have reviewed the application of GST on "free tickets".
• Free tickets are provided as consolation prizes in certain lottery games. They are awarded to the holders of tickets adjacent to a prize winning ticket.
• Following the review the free ticket component was excluded from the calculation of total monetary prizes.
• The same review also confirmed the existing treatment of free tickets with regard to the other component of the Global GST formula -total amounts wagered. There has been no change in accounting treatment on this.
Relevant legislative provisions
All references are to the A New Tax System (Goods and Services Tax) Act 1999:
Section 9-5
Section 9-10
Section 9-15
Section 126-10
Section 126-35
Reasons for decision
Summary
The free ticket is not a part of the total amount wagered and also is not a part of the total monetary prize and therefore is excluded in the calculation of your Global GST amount
Detailed reasoning
GST on gambling supplies is dealt with by using the global accounting system described in Division 126 of the GST Act. Section 126-10 of the GST Act defines the global GST amount for a tax period as:
(Total amount wagered - Total monetary prizes) x 1/11
where:
total amounts wagered is the sum of the consideration for all of your gambling supplies that are attributable to that tax period.
total monetary prizes is the sum of:
(a) the monetary prizes you are liable to pay, during the tax period, on the outcome of gambling events (whether or not any of those gambling events, or the gambling supplies to which the monetary prizes relate, take place during the tax period); and
(b) any amounts of money you are liable to pay, during the tax period, under agreements between you and recipients of your gambling supplies, to repay to them a proportion of their losses relating to those supplies (whether or not the supplies take place during the tax period).
The ATO's view on the global GST amount and prizes is explained in Goods and Services Taxation Ruling GSTR 2002/3.
Free Tickets
In order to be included in the global GST amount under Division 126 of the GST Act, the free ticket must be a part of the total wagered amount or a part of the total monetary prizes.
At issue is whether the free ticket is considered to be a monetary prize and hence included in the calculation of the Global amount.
We are of the view that the value of the free tickets does not fall within the meaning of a monetary prize for the purposes of section 126-10 of the GST Act.
A monetary prize is defined under section 195-1 of the GST Act to mean:
(a) any prize, or part of a prize, in the form of money; or
(b) if the prize is given at a casino - any prize, or part of a prize, in the form of money or in the form of gambling chips that may be redeemed for money.
As mentioned above Section 126-10 of the GST Act defines the global GST amount for a tax period as (Total amount wagered - Total monetary prizes) x 1/11
Total amount wagered
In your case there is no consideration for the supply of the free ticket. The ticket is awarded as a 'prize' to a participant in a current lottery. The ticket holder has not provided any consideration for the provision of the free ticket and therefore excluded in the calculation of your global GST amount.
Total monetary prizes
A free ticket is awarded to the holders of tickets adjacent to a prize winning ticket. This ticket is not redeemable for a monetary prize but merely provides entry into another lottery draw.
The free ticket is not a part of any prize or part of a prize, in the form of money and therefore is excluded in the calculation of your Global GST amount.