Edited version of your written advice

Authorisation Number: 1051320228709

Date of advice: 14 December 2017

Ruling

Subject: GST and gambling

Question

Does Entity A make a gambling supply when it holds a weekly poker evening?

Answer

Yes.

Question

Is the global GST amount calculated under subsection 126-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 as (total gross receipts (A) minus nightly prizes (E1)) multiplied by 1/11?

Answer

Yes.

Relevant facts and circumstances

Entity A (You) is registered for GST.

You are a not-for-profit sporting association holding a weekly poker evening, cash and tournament poker, for fundraising purposes.

You are granted a permit to conduct a gaming event from a Government Department. You have provided a sample Permit which includes the following information:

● The permit is granted to Entity A.

● The premises address of Entity A is specified.

● The conditions include:

– A financial return is to be lodged.

– The permit holder shall be responsible for the conduct of gaming.

– Where a contracted operator/supplier is hired a central bank shall be operated by the permit holder or other member of the organisation authorised by the permit holder.

You have provided a sample financial return (Return) which includes the following information:

GROSS RECEIPTS
(A) TOTAL GROSS RECEIPTS	$X
EXPENSES
(E1) Nightly Prizes	$X
(E2) Equipment Hire & Administration	$X
(E3) Permit Fee	$X
…
(B) TOTAL EXPENSES	$X
(C) NET PROFIT (A – B)	$X

You employ a licensed supplier and staff to conduct the event.

At the end of the gaming event all proceeds less prizes are paid to you. This figure is represented by (A) minus nightly prizes in the sample Return above. The nightly prizes are monetary prizes.

You then pay the licensed supplier, gaming staff, permit fees, and hire costs of equipment used by the licensed supplier.

You enter the amount received through your point of sale equipment and GST is calculated on the total amount received.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Division 126

Reasons for decision

In this reasoning, please note:

● all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

● all reference materials referred to are available on the Australian Taxation Office (ATO) website ato.gov.au

● all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act.

Division 126 provides for an alternative way of working out your net GST on a gambling supply under the global accounting method. You must be making a gambling supply in order to be eligible to use the global accounting method.

Goods and Services Tax Ruling GSTR 2002/3 Goods and services tax: prizes guidance on making the calculation.

The meaning of ‘gambling supply’ is contained in subsection 126-35(1) and includes a taxable supply involving the acceptance of a bet (however described) relating to the outcome of a gambling event.

The meaning of ‘gambling event’ is contained in subsection 126-35(2) and includes a race, game, or sporting event, or any other event, for which there is an outcome.

We are satisfied that in relation to your weekly poker evening of cash and tournament poker that you are conducting a gambling event. In addition we are satisfied that you are the provider of the gambling supply for the following reasons:

● The Permit is for you, Entity A, to carry out gaming functions at your address.

● The Permit makes you responsible for the conduct of gaming and allows for a contracted operator to be used. You conduct the gaming function at your premises using a contracted operator.

Subsection 126-5(1) provides that if you are liable for the GST on a gambling supply your net amount for the tax period to which the GST on the supply is attributable is as follows:

Global GST amount + Other GST - Input tax credits

where:

global GST amount is your *global GST amount for the tax period.

input tax credits is the sum of all of the input tax credits to which you are entitled on the *creditable acquisitions and *creditable importations that are attributable to the tax period.

Note: Any supplies under the global accounting system will not have attracted input tax credits

other GST is the sum of all of the GST for which you are liable on the *taxable supplies that are attributable to the tax period, other than *gambling supplies.

Subsection 126-10(1) provides that the global GST amount calculation is:

(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

…

The GST calculation is set out below using the figures from the sample Return that you submitted.

The global GST amount would be calculated under subsection 126-10(1) as follows:

(A – E1) x 1/11

($X - $X) x 1/11 = $Y.

Your net amount would be calculated under subsection 126-5(1) as follows:

$Y + Other GST – Input tax credits