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Edited version of your written advice
Authorisation Number: 1012930081842
Date of advice: 18 December 2015
Ruling
Subject: GST and supplies made by a non-profit organisation
Question 1
Are the subscription fees payable by your members consideration for taxable supplies and therefore subject to GST?
Answer
Yes.
Question 2
Are you making taxable supplies when you provide goods and services to your members, for example, the supply of movie tickets and other like items?
Answer
Yes.
Reasons for decision
Question 1
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 made 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.
Subscription fees
Generally, subscription/membership fees are payments in return for services or rights and will be subject to GST if the fees satisfy the criteria for a taxable supply. Your members are required to pay subscription fees and the membership gives rights to members even where nothing tangible is supplied.
Based upon the information you have supplied, your subscription fee is:
• made for consideration (payment)
• made in the course of your enterprise
• is connected with Australia (you are based here in Australia and your activities take place in 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 subscription 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 cannot access these concessions.
Therefore your subscription fees will be subject to GST and you are liable to pay GST of 1/11th of the subscription fees.
Question 2
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 and if consideration is provided 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. Specific to your circumstances, paragraphs 9-10(2)(a), (b) and (g) of the GST Act provide 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 (such as movie tickets and other like items) 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.
Relevant facts and circumstances
• The company is a company limited by guarantee.
• The company was established to provide social and recreational activities to its members.
• The company is a non-for-profit organisation.
• The company receives income from member's subscriptions, sale of goods and services to its members, bank interest and commissions.
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)
A New Tax System (Goods and Services Tax) Act 1999 Section 195-1