Edited version of private advice

Authorisation Number: 1052184845507

Date of advice: 30 October 2023

Ruling

Subject: GST and fund-raising events

Question

Can the Entity A treat the sale of goods at their Events as input taxed supplies under section 40-160 of the A New Tax System (Goods and Service Tax) Act 1999 (Cth) (GST Act)?

Answer

Yes, Entity A can treat the sale of goods as input taxed under section 40-160 of the GST Act.

This ruling applies for the following period:

XX XXX 20XX to XX XXX 20XX

The scheme commences on:

XX XXX 20XX

Relevant facts and circumstances

You are registered for GST.

You are an endorsed charity.

You sell goods at an event for $20 or less.

Relevant legislative provisions

A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 11-15

A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 40-160

A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 40-165

A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 176-1

A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 195-1

Reasons for decision

Subsection 40-160(1) of the GST Act allows an endorsed charity, a gift-deductible entity or a government school to choose to treat all supplies it makes, in connection with certain fund-raising events, as input taxed. Specifically, section 40-160 of the GST Act provides:

(1) A supply is input taxed if:

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

(b) the supply is made in connection with a *fund-raising event; and

(c) the supplier chooses to have all supplies that it makes in connection with the event treated as input taxed; and

(d) the event is referred to in the supplier's records as an event that is treated as input taxed.

Entity A is an endorsed charity.[1] Therefore, we must determine whether Entity A's sales of goods are supplies made in connection with a fund-raising event.

Supplies in connection with a fund-raising event

Subsection 40-165(1) of the GST describes what is meant by a fund-raising event and states:

(1) Any of these is a fund-raising event if it is conducted for the purpose of fund-raising and it does not form any part of a series or regular run of like or similar events:

(a) a fete, ball, gala show, dinner, performance or similar event;

(b) an event comprising sales of goods if:

(i) each sale is for a *consideration that does not exceed $20 or such other amount as the regulations specify; and

(ii) selling such goods is not a normal part of the supplier's *business;

...

(emphasis added)

However, subsection 40-165(2) of the GST Act provides that 'paragraph [40-165](1)(b) does not apply to an event that involves the sale of alcoholic beverages or tobacco products'.

Conducted for the purposes of fund-raising

Entity A conducts the Events solely for the purpose of fund-raising.

Does not form any part of a series or regular run of like or similar events

Subsection 40-165(4) of the GST provides that 'the Commissioner may determine, in writing, the frequency with which events may be held without forming any part of a series or regular run of like or similar events for the purposes of subsection (1)'.

The Commissioner has determined in the Goods and Services Tax: Frequency of Fund-raising Events Determination (No. 31) 2016 that the frequency with which fund-raising events may be held without forming part of a series or regular run of like or similar events is 15 fund-raising events in any financial year.

Entity A's Events do not form any part of a series or regular run like or similar events for the purposes of subsection 40-165(1) of the GST Act.

An event comprising of sales of goods

Subparagraph 40-165(1)(b)(i) of the GST Act provides that a fund-raising event includes an 'event comprising sales of goods if: ... each sale is for a *consideration that does not exceed $20...'.[2] We consider that subparagraph 40-165(1)(b)(i) of the GST Act is satisfied where the consideration for the individual item or good sold does not exceed $20.

We consider that Entity A's Events compromise of sales of goods where each sale is for a consideration that does not exceed $20 for the purposes of subparagraph 40-165(1)(b)(i) of the GST Act.

Not a normal part of your business

Based on the information above, we consider that the Events are not a normal part of Entity A's business. Therefore, subparagraph 40-165(1)(b)(ii) of the GST Act is satisfied.

Conclusion

Based on our reasoning above, we consider that the Event is a fund-raising event under paragraph 40-165(1)(b) of the GST Act. Therefore, the supplies are made in connection with a fund-raising event as required by paragraph 40-160(1)(b) of the GST Act.

Entity A may choose to treat the supplies made in connection with the Events as input taxed. Entity A must make the choice to treat each Event as input taxed under section 40-160 before making any sales.[3] This choice must be recorded in Entity A's records and retained for at least five years.[4]

If Entity A does not make the choice to treat all of the supplies in connection with a fund-raising event as input taxed under section 40-160 of the GST Act, the supplies connected with these events will be treated under the normal GST rules.

If Entity A elects to treat these events as input taxed under section 40-160 of the GST Act, they will not be entitled to claim input tax credits to the extent that the acquisitions made relate to the Events.[5]

[1] GST Act sections 176-1(1)(a), (2)(a)-(b).

[2] (emphasis added).

[3] GST Act paragraph 40-160(1)(c).

[4] GST Act paragraph 40-160(1)(d). See subsection 382-5(1) of the Taxation Administration Act 1953.

[5] Paragraph 11-15(2)(a) of the GST Act provides that 'you do not acquire the thing for a creditable purpose to the extent that: (a) the acquisition relates to making supplies that would be *input taxed...' (emphasis added).