Edited version of private advice

Authorisation Number: 1051597672082

Date of advice: 30 October 2019

Ruling

Subject: Religious services

Question 1

Are any of the conferences that you hold considered to be a supply of religious services that is integral to the practice of your religion in accordance with section 38-220 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

No.

Question 2

When determining the GST inclusive market value in accordance with subsection 38-250(1) of the GST Act for each or your conferences, would it be appropriate for comparison purposes to use the registration fees charged by secular organisations for education conferences?

Answer 2

No.

Question 3

Is GST payable on the food component of the registration fee for each of your conferences?

Answer 3

Yes, as long as section 38-250 of the GST Act does not apply to make the supply GST-free.

The scheme commences on:

30 October 2019

Relevant facts and circumstances

·        You are registered for Goods and Services Tax (GST).

·        You are an Australian Charities and Not-for-profits Commission (ACNC) registered charity, with the purpose/subtype of 'Advancing religion'. You are also endorsed as a charity for the purposes of section 176 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

·        You hold religious conferences.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

Section 38-2;

Section 38-3;

Section 38-4;

Section 38-5;

Section 38-220;

Subsection 38-250(1)

Reasons for decision

Summary

The training of religious leaders, even if that training has a religious element, is not the supply of a religious service that is integral to the practice of your religion.

The training courses provided by other religious organisations are more comparable with your conferences as they cover similar topics and are supplied within the market that you operate in. As the tests for determining the market value are successive tests, you would first need to consider supplies that are the same as your supplies and within the market that you operate in; and only if there are no such supplies then supplies that are similar to your supplies and within the market that you operate in.

Generally, the supply of food is GST-free; however, this is not the case in relation to supplies of food for consumption on the premises from which the food is supplied unless there is another provision of the GST Act (such as section 38-250) under which the supply would be GST-free.

Detailed reasoning

In this ruling:

·        unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act),

·        all terms marked by an *asterisk are defined terms in the GST Act, and

·        all reference materials, published by the Australian Taxation Office (ATO), that are referred to are available on the ATO website ato.gov.au

Conferences

Section 38-220 of the GST Act provides that a supply is GST-free if it is a supply of service that:

(a)   is supplied by a *ACNC-registered religious institution; and

(b)   is integral to the practice of that religion.

You are an ACNC registered charity, with the purpose/subtype of 'advancing religion', and thus an ACNC-registered religious institution. The further question that must be answered is whether or not the supply of each of your conferences is integral to the practice of your religion.

Whether or not a particular conference is integral to the practice of an entity's religion is a question of fact determined by comparing the content and nature of the activities in question with the content and nature of the usual and regularly provided activities of the practice of the entity's religion.

It is thus necessary to compare the content and nature of the activities for your conferences with the content and nature of the usual and regularly provided activities of the practice of your religion.

Religious teaching/instruction is one of the usual and regularly provided activities of the practice of your religion; with such teaching focussing on the moral and ethical beliefs of your religion. Thus, for religious teaching to be integral to the practice of your religion, the teaching would need to focus on the moral and ethical beliefs of your religion.

The program of activities for your conferences is mainly aimed at equipping religious leaders rather than being focussed on the moral and ethical beliefs of your religion.

The Charities Consultative Committee Resolved Issues Document (available on our website - refer below) provides at part 10, issue 1, commentary regarding the question of what is a religious service. It mentions that the Vos report considered this issue and stated that 'where the services were purely religious and there is no commercial equivalent then it was appropriate for this to be GST-free'.

Some examples of a religious service that are included are: worship, Sunday School, a wedding, funeral or baptism service, religious retreats, Bible study groups, etc. The services would need to be conducted in accordance with the canons of conduct for the members of that religious institution.

Some examples of services that have a commercial equivalent and thus are not considered to be GST-free religious services are: provision of administrative and financial services, engagement of a minister of religion, the civil or secular elements of religious services (e.g. flowers, music, reimbursements of travel expenses, accommodation and food at a religious retreat, library loan or hire and items for private use in devotion).

https://www.ato.gov.au/Business/GST/In-detail/GST-issues-registers/Charities-consultative-committee-resolved-issues-document/?page=32#Part_10___Religious_institutions_and_services

Activities undertaken at a religious retreat usually include: prayer, the study of religious texts, and the undertaking of other activities that are integral to the practice of the particular religion. Where a fee is charged for attendance at a religious retreat, the fee may cover the cost of religious instruction or services as well as the cost of accommodation, food and transport. In such a case, it would be up to the religious institution to determine how much of the fee is for the religious services and how much for the other, secular elements.

In your case however, whilst the conferences have a religious element and are not simply social or recreational occasions, the teaching/instruction which takes place is aimed more at equipping leaders rather than focussing on the moral and ethical beliefs of your religion.

It is not accepted that training people to be able to conduct religious services or in the practicalities of things associated with your religion, is in itself, the supply of a religious service.

The training of a student or religious leader, even if the training has a religious element, is not the supply of a religious service that is integral to the practice of your religion.

Food

Section 38-2 of the GST Act provides that the supply of food is GST-free. Section 38-4 of the GST Act states what is meant by the term food, which amongst other things includes food for human consumption (whether or not requiring processing or treatment).

However, certain supplies of food are not GST-free, as provided in section 38-3 of the GST Act. In particular, paragraph 38-3(1)(a) of the GST Act provides that food for consumption on the premises from which it is supplied is not GST-free.

Section 38-5 of the GST Act provides that premises, in relation to the supply of food, includes amongst other things, the place where the supply takes place.

Goods and Services Tax Determination 2000/4 Goods and services tax: what does the word 'premises' mean in the expression, 'a supply of food for consumption on the premises from which it is supplied' (GSTD 200/4), states as follows at paragraph six:

6. In some situations it is important to consider from which premises the supply of food is made. Where food is provided under catering arrangements the food may be prepared in a commercial kitchen and transported to a location where it is to be consumed. In these circumstances food is supplied from the premises where the catered event takes place. In contrast food that is home delivered (for example, milk, water, pre-ordered takeaway food and supermarket items) is not a supply of food for consumption on the premises from which it is supplied. In these circumstances the delivery service is a separate supply from the supply of food which may be consumed at any location.

The lunches, morning and afternoon teas, and refreshments provided at each of your conferences are supplied from the venues where the conferences take place. As such, the supplies of food at your conferences are not GST-free supplies of food under section 38-2 of the GST Act.

However, your supplies of lunches, morning and afternoon teas, and refreshments might be GST-free under another provision, such as section 38-250 of the GST Act.

Nominal consideration

Subsection 38-250(1) of the GST Act states as follows:

(1)   A supply is GST-free if:

(a)   the supplier is an *endorsed charity, a *gift-deductible entity or a *government school; and

(b)   the supply is for *consideration that:

(i)               if the supply is a supply of accommodation - is less than 75% of the *GST inclusive market value of the supply; or

(ii)              if the supply is not a supply of accommodation - is less than 50% of the GST inclusive market value of the supply.

The Charities Consultative Committee Non-commercial activities of charities, cost of supply and market value tests document (CCC document) details how to work out the market value of your supplies for the purposes of subsection 38-250(1) of the GST Act. You were previously provided with a copy of this document.

Difficulties may arise where you receive a single amount for making a mixed supply that has separately identifiable components. To be able to correctly apply subsection 38-250(1) of the GST Act, the registration fees for each of your conferences would need to be apportioned to establish the part of the fee that relates to each separate supply.

You can use any reasonable method to apportion the consideration received for each supply. However, you must be able to show that your method is reasonable and supportable in your particular circumstances.

In relation to whether or not a religious institution could use the registration fees charged by other organisations for secular education conferences/courses in determining the market value of its conferences, would depend on the particular circumstances. Whilst in general a charity can use prices charged by commercial organisations in determining the market value of its supplies, this is on the proviso that the supplies made by the commercial organisations are the 'same supply' made within the same market that the charity operates in; or if no 'same supply' exists then the supplies made by the commercial organisations are a 'similar supply' made within the same market that the charity operates in.

The CCC document provides methodologies which allow charities to determine a market value that is acceptable to the ATO, when applying the non-commercial supply rules (refer to Section B - Market value guidelines).

The term 'market value' is not defined in the GST Act. For the purposes of the non-commercial supply rules, we consider that the market value of a thing is the price that would be negotiated between:

·   a knowledgeable, willing and not anxious buyer, and

·   a knowledgeable, willing and not anxious seller acting at 'arm's length' in an appropriate market.

Paragraphs 38 and 39 of the CCC document provide as follows regarding how to determine the market value:

38. In determining the market value of a supply, a charity must apply the following successive tests:

·  the charity must work out whether the same supply exists within the market they operate in - referred to as the 'same supply test'

·  if no 'same supply' exists, the charity must then work out whether a similar supply exists within the market they operate in - referred to as the 'similar supply test'

·  if no 'same supply' or 'similar supply' exists, the charity may seek approval from the Commissioner to use another methodology to calculate the market value of the supply.

     39. These tests are successive tests for working out the market value of a supply, they are not alternative tests. If a charity identifies a 'same supply' in the market, the price charged by this other supplier is then the market value of the charity's supply. The charity cannot calculate the market value of the supply it makes by reference to the second or third tests. We consider that the first two tests would generally establish a market value and the last test would be rarely used.

You advised that there are other religious organisations which provide training courses on similar topics as those covered in your conferences, and that the registration fees charged by those other religious organisations are approximately the same as what you charge.

As the tests for determining the market value of a charity's supplies are successive tests, you would need to work out whether the same supply exists within the market you operate in, and if not, whether a similar supply exists within the market that you operate in.

Based on the information that you have provided, we consider the training courses provided by other religious organisations to be more comparable with your conferences as they cover similar topics to those covered in your conferences and are supplied within the market that you operate in.

The educational training courses provided by secular organisations that you provided some information in relation to cover very different topics to those covered in your conferences. The market that those supplies are made within is also different to the market that you operate in.

As such, given that the registration fees charged by other religious organisations for holding training courses are approximately the same as what you charge this would mean that the non-food component of your registration fees would not be GST-free under subsection 38-250(1). Whether or not the food component would be GST-free under subsection 38-250(1) would depend on the facts.