The GST
Anne Harvey – Group Tax Manager, Corporate Finance
Objectives • Provide an overview of GST and how it relates to fundraising and sponsorships at UNSW
• Understanding when to apply GST
What is GST Goods and services tax (GST) is a broad based tax of 10% on most goods, services and other items sold or consumed in Australia. GST is a tax on transactions. Registration Annual turnover $75,000 or more Non Profit organisation - if annual turnover $150,000 or more Optional if below these thresholds
When does GST apply When is it applicable • Taxable sales
price includes GST pay GST on sales claim GST on purchases 1/11th of Total invoice/sale price
• Taxable supply for consideration in course of furtherance of carrying on enterprise connected with Australia registered or required to be registered not GST free or input taxed
When is it not applicable • GST free sales Basic food - meat, milk, bread, fruit and vegetables Most education, child care, health Some exports
• Input Taxed sales Residential property Financial transactions Cannot claim GST credit
Registration
Registered • www.abr.business • Look up ABN on ABR regn • Charity tax Concession • Deductible Gift
Not • Does not include GST in of sales • Must still pay GST price if charged
• Meet threshold • Charge GST on all Sales • Claim ITC for GST purchases for business • Completes an Activity (BAS)
• Not able to claim GST (Input Tax Credits) charged for purchases business
How Does GST work Supplie r
Raises Tax Invoice
Purchase r Receives Tax Invoice
Issue Tax invoice $1100
•Taxable Sale $1000 •GST on sale $100
Receives Tax Invoice $1100
•Purchases $1000 •GST charged $100
Total Sales on BAS $1100
•Sales $1000 • Remit GST 1/11th to ATO $100
Total Acquisitions on BAS $1100
•Acquisitio n $1000 •Claim ITC for GST $100
Cash Received $1100
•Net revenue $1000 •GST paid to ATO $100
Cash Payment $1100
•Net Expense $1000 •GST claimed from ATO $100
UNSW
Sponso Spons or r
Taxable Supply and Consideration
Supply • • • • • • • •
•
Any form of supply Supply of goods Supply of services Provision of advice or information Grant, assignment or surrender of real property Creation, grant, transfer, assignment or surrender of any right Financial supply Entry into or release from an obligation to do anything, refrain from act, to tolerate act Does not include supply of money unless consideration
Consideration • •
• • •
•
Any payment or any act or forbearance, in connection with a supply of anything Any payment, or any act or forbearance, in response to or for the inducement of a supply of anything Does not matter if voluntary, or by recipient of supply Does not matter if court order/ other body Does not matter if relates to settlement proceeding before court /other body Gift to Non Profit body – not consideration
GST Concessions - NFP
Concession 1. 2. 3. 4. 5. 6.
Comment
Gift – No GST Donated second hand goods– Sale GST free Fundraising event – can treat as Input Taxed
1. 2. 3.
Raffles and bingo tickets – GST free Non commercial activities – payment less than set amount – GST free Reimburse Volunteer expenses – claim GST credit
4. 5. 6.
Made voluntarily and no material benefit No change in original character of goods All sales associated with event as IT – cannot claim GST credits for purchases, not charge GST on sales. Keep record of choice Not contravene state or territory law < 50% GST inclusive Market value or < 75% of amount paid to acquire goods Exact reimbursement of expense. Obtain Tax invoice for purchase
Gifts What is a gift Made voluntarily - no obligation to pay, no contractual arrangement for NFP organisation to use payment in a specific way Arises by way of benefaction – DGR is advantaged, without detriment to recipient No material benefit to payer – insubstantial value, cannot be put to a use, not marketable. • Badge/ plaque - not material, • Advertising banners , display of logo/ name - material
What is the impact to the organisation if we charged GST erroneously? Gift does not meet rules for Taxable Supply and consideration. If no Tax Invoice, may not be able to claim ITC for GST If not registered for GST, cannot claim ITC Additional cost to them If registered for GST, may be able to claim ITC if Tax Invoice provided
Risk to UNSW if GST Not charged where Applicable If Taxable Supply UNSW still have to remit 1/11th of total amount to ATO Loss of revenue received by UNSW – only 10/11ths. Audit risk – inadequate processes and controls Penalties and Fines
Sponsorship Sponsorship support provided in form of money – consideration
In return UNSW provide advertising, signage, naming right, or other material benefit (something of value) – supply As UNSW registered for GST, it has to pay GST on sponsorship received If sponsor registered for GST, claim Input Tax Credit for GST with Tax Invoice Sponsorships of DGRs by commercial entities – Advertising benefit - GST
Sponsorship Example
GST Application/ Reasons
1.
1.
Sponsor representation on selection panel
Benefit to Sponsor ?
2.
Student Internship may be offered
2.
3. 4.
Student Internship is mandatory Post Graduate Research student – research of interest to Sponsor Scholar selected as area of research of interest to Sponsor Capital Project - stipulate naming rights Event - Public recognition / Commercial Advertising
3. 4.
Chair/ Fellowship Prize/ Award
8. 9.
5. 6. 7.
8. 9.
5. 6. 7.
Right in say of recipient – GST Sponsor retains some control - GST
Privilege to Sponsor? Right to services – GST Services of student , marketing – GST Research interest and benefit – GST Research interest and benefit - GST Use of results - GST Marketing benefit / obligation – GST Marketing benefit – GST Mere acknowledgement of generosity/ plaque – No GST Marketing benefit , attend function – GST Internships, attend function, membership - GST
Fundraising Example
GST
1.
Ticket to fundraising dinner $1100 $1100 price to attend dinner
1.
Ticket price includes GST of $100. Funds raised $1000
2.
Ticket price to dinner $110 Additional donation of $200
2.
Ticket price includes GST of $10 $200 is gift – No GST
3.
Auction Purchase item for $550, value $300
3.
Amount paid $550 not voluntary, material benefit - not gift GST of $550/11 = $50
Questions
Contact: Anne Harvey - Ext 51635. Email:
[email protected]
