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The GST Anne Harvey – Group Tax Manager, Corporate Finance.

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Presentation on theme: "The GST Anne Harvey – Group Tax Manager, Corporate Finance."— Presentation transcript:

1 The GST Anne Harvey – Group Tax Manager, Corporate Finance

2 Objectives Provide an overview of GST and how it relates to fundraising and sponsorships at UNSW Understanding when to apply GST

3 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

4 When is it applicable Taxable sales  price includes GST  pay GST on sales  claim GST on purchases  1/11 th 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 When does GST apply

5 Registration Registered Look up ABN on ABR - GST regn Charity tax Concession Deductible Gift Recipient (DGR) Meet threshold Charge GST on all Taxable Sales Claim ITC for GST charged on purchases for business Completes an Activity Statement (BAS) Not registered Does not include GST in price of sales Must still pay GST inclusive price if charged Not able to claim GST credits (Input Tax Credits) for GST charged for purchases in business

6 How Does GST work Issue Tax invoice $1100 Taxable Sale $1000 GST on sale $100 Total Sales on BAS $1100 Sales $1000 Remit GST 1/11 th to ATO $100 Cash Received $1100 Net revenue $1000 GST paid to ATO $100 Receives Tax Invoice $1100 Purchases $1000 GST charged $100 Total Acquisitions on BAS $1100 Acquisition $1000 Claim ITC for GST $100 Cash Payment $1100 Net Expense $1000 GST claimed from ATO $100 Supplie r Raises Tax Invoice Purchase r Receives Tax Invoice Sponso r UNS W Sponso r

7 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 Taxable Supply and Consideration

8 Concession 1.Gift – No GST 2.Donated second hand goods– Sale GST free 3.Fundraising event – can treat as Input Taxed 4.Raffles and bingo tickets – GST free 5.Non commercial activities – payment less than set amount – GST free 6.Reimburse Volunteer expenses – claim GST credit Comment 1.Made voluntarily and no material benefit 2.No change in original character of goods 3.All sales associated with event as IT – cannot claim GST credits for purchases, not charge GST on sales. Keep record of choice 4.Not contravene state or territory law 5.< 50% GST inclusive Market value or < 75% of amount paid to acquire goods 6. Exact reimbursement of expense. Obtain Tax invoice for purchase GST Concessions - NFP

9 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

10 Risk to UNSW if GST Not charged where Applicable  If Taxable Supply UNSW still have to remit 1/11 th of total amount to ATO  Loss of revenue received by UNSW – only 10/11 ths.  Audit risk – inadequate processes and controls  Penalties and Fines

11 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

12 1.Sponsor representation on selection panel 2.Student Internship may be offered 3.Student Internship is mandatory 4.Post Graduate Research student – research of interest to Sponsor 5.Scholar selected as area of research of interest to Sponsor 6.Capital Project - stipulate naming rights 7.Event - Public recognition / Commercial Advertising 8.Chair/ Fellowship 9.Prize/ Award GST Application/ Reasons 1.Benefit to Sponsor ?  Right in say of recipient – GST  Sponsor retains some control - GST 2.Privilege to Sponsor?  Right to services – GST 3.Services of student, marketing – GST 4.Research interest and benefit – GST 5.Research interest and benefit - GST  Use of results - GST 6.Marketing benefit / obligation – GST 7.Marketing benefit – GST  Mere acknowledgement of generosity/ plaque – No GST 8.Marketing benefit, attend function – GST 9.Internships, attend function, membership - GST Example Sponsorship

13 Example 1.Ticket to fundraising dinner $1100  $1100 price to attend dinner 2.Ticket price to dinner $110  Additional donation of $200 3.Auction  Purchase item for $550, value $300 GST 1.Ticket price includes GST of $100.  Funds raised $ Ticket price includes GST of $10  $200 is gift – No GST 3.Amount paid $550  not voluntary, material benefit - not gift  GST of $550/11 = $50 Fundraising

14 Questions Contact: Anne Harvey - Ext


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