ATO ID 2005/121: GST and supply of meals to clients in an in-house dining facility
Date of decision: 20 August 2002
Business line: Indirect Tax

Issue
Is the entity, a business operator, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides meals to clients in an in-house dining facility for no consideration but in accordance with section 32-70 of the Income Tax Assessment Act 1997 (ITAA 1997), it includes $30 in its assessable income for each meal provided?

Decision
No, the entity is not making a taxable supply under section 9-5 of the GST Act, when it provides meals to clients in an in-house dining facility for no consideration but in accordance with section 32-70 of the ITAA 1997, it includes $30 in its assessable income for each meal provided.

Facts
The entity is a business operator and is registered for goods and services tax (GST). The entity supplies meals to clients in an in-house dining facility. The entity does not receive any consideration from the client for the provision of the meal. The client is not an associate of the entity. In accordance with section 32-70 of the ITAA 1997, the entity includes $30 per meal as assessable income for meals provided to clients. This allows the entity to claim an income tax deduction for the cost of the meal provided to clients.

Reasons for decision
Summary: Under section 9-5 of the GST Act, an entity makes a taxable supply if: Under the first requirement of section 9-5 of the GST Act, the supply made by the entity must be for consideration. The entity supplies meals to clients in its in-house dining facility. The entity does not receive any consideration from the client for the provision of the meal. However, under section 32-70 of the ITAA 1997, the entity includes $30 in its assessable income, allowing the entity to be eligible to claim a deduction. 'Consideration' is defined in section 9-15 of the GST Act to include any payment, act or forbearance, in connection with, in response to or for the inducement of a supply of anything. This $30 is the arbitrary amount statutorily deemed for income tax purposes to allow a deduction under the ITAA 1997. The inclusion of $30 in the entity's assessable income is not the receipt of consideration. As such, there is no consideration provided for the entity's supply of the meal in its in-house dining facility. Therefore, the entity is not making a taxable supply under section 9-5 of the GST Act when it provides meals to clients in an in-house dining facility for no consideration but in accordance with section 32-70 of the ITAA 1997, it includes $30 in its assessable income for each meal provided.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 section 9-15
Related ATO interpretative decisions: ATO ID 2005/122
Subject references: Goods and services tax GST supplies & acquisitions GST consideration GST supply Taxable supply