Edited version of your written advice

Authorisation Number: 1012698825275

Ruling

Subject: GST and crowd funding for DVD production

Question

Will you be liable to pay goods and services tax (GST) on the amount you will receive from the fund raising campaign made through a crowd funding platform?

Advice

Yes, based on the information received you will be liable to pay GST on the amount you will receive from the fund raising campaign made through a crowd funding platform as the amount will be consideration for taxable supplies you will make under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Relevant fact

You are considering making a documentary DVD and you will set up a company to control the production of the DVD. You currently are not registered for GST.

You will start a fundraising campaign through a crowd platform to raise money to produce the DVD. You are aiming to raise more than $75,000 in order to be able to produce the DVD.

People who donate (contributors) will receive rewards and you advise the terms of the rewards will be as follows:

$X	You will receive a thank you published on social media pages and you will get your very own copy of the documentary DVD posted to you within Australia.
$Y	This is for non-Australian residents only. You will receive a thank you published on social media pages and you will get your very own copy of the documentary DVD posted to you anywhere in the world.
$Z	You will receive a thank you published on our social media pages and, you will receive a DVD and a limited Blu-ray edition of the documentary posted to you anywhere in the world.
$A	A Producer Credit Wow you are a big supporter. You will receive a thank you published on social media pages and you will get a DVD and a limited Blu-ray edition of the documentary posted to you. You will also get a credit on the Documentary as A Producer.
$B	B Producer Credit Wow you are a huge supporter. You will receive a thank you published on social media pages and you will get a DVD and a limited Blu-ray edition of the documentary posted to you. You will also get a credit on the Documentary as a B Producer.
$C	C Producer Credit Wow you are a massive supporter. You will receive a thank you published on social media pages and you will get a DVD and a limited Blu-ray edition of the documentary posted to you. You will also get a credit on the Documentary as a C Producer.

The production of the DVDS will take more than 60 days after receipt of the amount from the contributors.

You will also sell the DVDs on your website. The sale price of the DVD will be $X which includes postage within Australia.

Relevant legislative provisions

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

Reasons for decision

GST is payable on a taxable supply. You make a taxable supply under section 9-5 of the GST Act 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 for GST.

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

All of the above requirements must be satisfied for a supply to be a taxable supply under section 9-5 of the GST Act.

We will now apply the information received to section 9-5 of the GST Act.

Paragraph 9-5(a) of the GST Act

Paragraph 9-5(a) of the GST Act requires that you make a supply for consideration. There needs to be a supply, a payment and the necessary relationship between the supply and the payment.

Where one party makes a monetary payment to another, something of economic value is provided. The question is whether there is sufficient nexus between the supply and the payment as consideration.

In determining whether a sufficient nexus exists between a supply and a consideration, regard needs to be had to the true character of the transaction. An arrangement between parties will be characterised not merely by the description that parties give to the arrangement, but by looking at all of the transactions entered into and the circumstances in which the transactions are made.

From information received you are planning to create a documentary DVD and will organise a fund raising campaign in order to produce the DVD. You will offer rewards depending on the level of contribution to the contributors in return for their contributions.

In this instance there is sufficient nexus between the rewards to be given to the contributors and the payments to be received from them and, we consider you are making a supply of DVDs to the contributors when offering them rewards. The 'Thanks on social media pages and credit' are incidental to the supply of DVDs.

Accordingly paragraph 9-5(a) of the GST Act is satisfied as you are making your supply of DVDs for consideration to the contributors.

Paragraph 9-5(b) of the GST Act

You advise you will set up a company to produce the documentary DVD and the produced DVDs will be sold to the public and given to the contributors. Accordingly, the supply of the DVD will be made through a business that you will carry on in Australia. Paragraph 9-5(b) of the GST Act is satisfied.

Paragraph 9-5 (c) of the GST Act

The supply of DVDs is a supply of goods for GST purposes as they will be delivered in a tangible form.

The supply of DVDs will be connected with Australia as:

• the goods will be made available to recipient in Australia; and

• the goods will be removed from Australia when sent to overseas recipient.

Paragraph 9-5 (c) of the GST Act is satisfied.

Paragraph 9-5(d) of the GST Act

Under section 23-5 of the GST Act, you are required to be registered if:

a) you are carrying on an enterprise, and

b) your GST turnover meets the registration turnover threshold (currently $75,000).

Your GST turnover is your gross business income (not your profit), excluding any:

• GST you included in sales to your customers

• sales that are not for payment and are not taxable

• sales not connected with an enterprise you run

• input-taxed sales you make

• sales not connected with Australia

You reach the GST turnover threshold if either:

• your 'current GST turnover' - your turnover for the current month and the previous 11 months - totals $75,000 or more ($150,000 or more for non-profit organisations).

• your 'projected GST turnover' - your total turnover for the current month and the next 11 months - is likely to be $75,000 or more ($150,000 or more for non-profit organisations).

You advise that you intend to raise more than $75,000 from the contributors to make the DVD. In this instance you will be required to be registered for GST as your projected GST turnover will be above the GST registration threshold of $75,000. Paragraph 9-5(d) of the GST Act is therefore satisfied.

GST-free and Input Tax

However, your supply of DVDs will not be a taxable supply to the extent that it is GST-free or input taxed.

There is no provision under the GST Act that will make your supply of DVDs input taxed.

Under subsection 38-185(1) of the GST Act a supply of goods is GST-free if the supplier exports them from Australia before or within 60 days (or such further period as the Commissioner allows) after:

a) the day on which the supplier receives any of the consideration for the supply; or

b) if, on an earlier day, the supplier gives an invoice for the supply - the day on which the supplier gives the invoice.

The contributors will not receive the DVDs within 60 days of receipt of their contributions by you. In this instance your supply of DVDs to the non-resident contributors will not be GST-free under subsection 38-185(1) of the GST Act.

Summary

As all the requirements in section 9-5 of the GST Act will be satisfied, your supply of DVDs to the contributors will be taxable supplies. You will be liable to pay GST for the taxable supplies.