Private ruling: GST - financial assistance payments
Date of advice: 20 May 2026
Published: 3 August 2026

Ruling: Q1: Are you making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to Organisation A for the contribution made towards Project A under Agreement A? | A1: No. | Q2: Are you making a taxable supply to Organisation A under section 9-5 of the GST Act where Organisation A's contribution is applied to the costs of engaging third-party contractors to undertake works specified in Agreement A? | A2: No. | Q3: Are you making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to Organisation B for the contribution made towards Project B under Agreement B? | A3: No. | Q4: Are you making a taxable supply to Organisation B under section 9-5 of the GST Act where Organisation B's contribution is applied to the costs of engaging third-party contractors to undertake works specified in Agreement B? | A4: No.

Relevant facts and circumstances: You are an entity registered for Goods and Services Tax (GST). Issue 1 You were contacted by Organisation A with the concept for Project A. Project A was for the creation of assets that you would own and maintain, on property leased by you to Organisation A. You signed Agreement A with Organisation A to undertake Project A. Organisation A contributed $X to you for the project. You applied for a grant to fund the project. Organisation A was not a party to this grant. In completing Project A, you engaged third-party contractors to carry out the works. You were responsible for: • selecting the contractors, • determining the scope of works, • managing performance under the contract, and • making payment to the contractors. Organisation A was not a party to the contract between you and the contractors and did not have any contractual rights against the contractors. The project was dependent on the contribution from Organisation A. Unused amounts were refunded at the end of the project. You own and are responsible for the maintenance of the assets resulting from Project A. Issue 2 You were contacted by Organisation B with the concept for Project B. You signed Agreement B with Organisation B to undertake Project B. Organisation B contributed $X to you for the project. In completing Project B, you engaged third-party contractors to carry out the works. You were responsible for: • selecting the contractors, • determining the scope of works, • managing performance under the contract, and • making payment to the contractors. Organisation B was not a party to the contract between you and the contractors and does not have any contractual rights against the contractors. The result of Project B was for public use and enjoyment and is maintained by you.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5

Reasons for decision: Summary: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable supply if: • the supply is made for consideration • the supply is made in the course or furtherance of an enterprise that you carry on • the supply is connected with the indirect tax zone (includes Australia), and • you are registered or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. All the above requirements must be met for a supply you make to be taxable. To satisfy the first requirement in section 9-5, an entity must first make a 'supply' for 'consideration'. Relevantly , Goods and Services Tax Ruling 2012/2 Goods and services tax: financial assistance payments (GSTR 2012/2) explains the Commissioner's views on when a financial assistance payment is consideration for a supply and provides the following guidance: • for a financial assistance payment to be consideration for a supply there must be a 'sufficient nexus' between the financial assistance payment made by the payer and a supply made by the payee; • a sufficient nexus exists where, upon an objective assessment and regard is had to the true nature of the transaction, the financial assistance payment is found to be made 'in connection with', 'in response to' or 'for the inducement of' a supply; • in identifying the character of the nexus required, the word 'for' ensures that not every connection between a supply and consideration meets the requirements for a taxable or input taxed supply (it is therefore not enough that there be any form of connection between a supply and the payment of consideration to constitute a taxable or input taxed supply); • reference to all of the surrounding circumstances of the arrangement supporting the payment of financial assistance (considered as a whole) determines whether there is a sufficient nexus. The surrounding circumstances may include the statutory purpose of the payer in providing the financial assistance, the activities which are to be undertaken by the payee and any other terms and conditions attached to the payment; • provided that there is a sufficient nexus, a voluntary payment can be consideration for a supply (i.e. the payer in such a case does not have to be the recipient of the supply). Paragraphs 55 and 56 of GSTR 2012/2 provide that some arrangements do not involve the making of any supply whatsoever, precluding the first component of a taxable supply. In particular, there is no supply where the agreement is not binding, and where there are no things, such as goods or some other benefit, passing between the parties. The following examples in GSTR 2012/2 are relevant to these circumstances. | Detailed Reasoning - Example 10 - no supply - mere expectation: 58. A local tennis club is seeking funding to enable them to resurface their privately owned tennis courts. The local council provides financial assistance to the tennis club on the basis that the money is only used for the resurfacing of the tennis courts. 59. The local council has an expectation that the works will be carried out. However, as there is no binding obligation on the tennis club to actually carry out the resurfacing of the courts, and there are no other goods or services passing between the parties there is no supply to the local council. 60. There are no GST consequences arising from the arrangement for either party. | Detailed Reasoning - Example 11 - no supply - mere expectation (where the thing is done): 61. Continuing with the last example. 62. Even if the payment is ultimately used to resurface the tennis courts, this does not change the fact that the tennis club has not made any supply to the local council. Transactions that are neither based in an agreement that binds the parties in some way nor involve the supply of goods, services or, some other thing to the payer, do not establish a supply. In this example, the mere doing of the thing that was expected does not amount to a supply to the local council because it does not involve some good, service or other supply being provided to the local council by the tennis club for which the payment is consideration. Rather, the payment has facilitated the acquisition of services by the tennis club in having its courts resurfaced. This is not a supply made to the local council. In your case, the terms of Agreement A do not represent a binding obligation. While the project would not have proceeded without the contribution this still does not represent a binding obligation on your part, merely expectation where the project was ultimately completed, per Example 11. In your case, no goods or other benefits have passed between the parties, as you own and maintain the asset that resulted from the project, and Organisation A's right to use the asset previously existed under the lease agreement. As such, you have not made a supply, and the contribution is not consideration for a taxable supply. | Detailed Reasoning - Question 2: Following from Question 1, and per example 11 in GSTR 2012/2, the mere fact of using the contribution to engage third-party contractors to undertake the works does not represent a taxable supply. The contribution has facilitated the acquisition of the services to complete Project A and the acquisition of those services is not supply made to Organisation A. | Detailed Reasoning - Question 3: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable supply if: • the supply is made for consideration • the supply is made in the course or furtherance of an enterprise that you carry on • the supply is connected with the indirect tax zone (includes Australia), and • you are registered or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. All the above requirements must be met for a supply you make to be taxable. To satisfy the first requirement in section 9-5, an entity must first make a 'supply' for 'consideration'. Relevantly , Goods and Services Tax Ruling 2012/2 Goods and services tax: financial assistance payments (GSTR 2012/2) explains the Commissioner's views on when a financial assistance payment is consideration for a supply and provides the following guidance: • for a financial assistance payment to be consideration for a supply there must be a 'sufficient nexus' between the financial assistance payment made by the payer and a supply made by the payee; • a sufficient nexus exists where, upon an objective assessment and regard is had to the true nature of the transaction, the financial assistance payment is found to be made 'in connection with', 'in response to' or 'for the inducement of' a supply; • in identifying the character of the nexus required, the word 'for' ensures that not every connection between a supply and consideration meets the requirements for a taxable or input taxed supply (it is therefore not enough that there be any form of connection between a supply and the payment of consideration to constitute a taxable or input taxed supply); • reference to all of the surrounding circumstances of the arrangement supporting the payment of financial assistance (considered as a whole) determines whether there is a sufficient nexus. The surrounding circumstances may include the statutory purpose of the payer in providing the financial assistance, the activities which are to be undertaken by the payee and any other terms and conditions attached to the payment; • provided that there is a sufficient nexus, a voluntary payment can be consideration for a supply (i.e. the payer in such a case does not have to be the recipient of the supply). Paragraphs 55 and 56 of GSTR 2012/2 provide that some arrangements do not involve the making of any supply whatsoever, precluding the first component of a taxable supply. In particular, there is no supply where the agreement is not binding, and where there are no things, such as goods or some other benefit, passing between the parties. The following examples in GSTR 2012/2 are relevant to these circumstances. | Detailed Reasoning - Example 10 - no supply - mere expectation: 58. A local tennis club is seeking funding to enable them to resurface their privately owned tennis courts. The local council provides financial assistance to the tennis club on the basis that the money is only used for the resurfacing of the tennis courts. 59. The local council has an expectation that the works will be carried out. However, as there is no binding obligation on the tennis club to actually carry out the resurfacing of the courts, and there are no other goods or services passing between the parties there is no supply to the local council. 60. There are no GST consequences arising from the arrangement for either party. | Detailed Reasoning - Example 11 - no supply - mere expectation (where the thing is done): 61. Continuing with the last example. 62. Even if the payment is ultimately used to resurface the tennis courts, this does not change the fact that the tennis club has not made any supply to the local council. Transactions that are neither based in an agreement that binds the parties in some way nor involve the supply of goods, services or, some other thing to the payer, do not establish a supply. In this example, the mere doing of the thing that was expected does not amount to a supply to the local council because it does not involve some good, service or other supply being provided to the local council by the tennis club for which the payment is consideration. Rather, the payment has facilitated the acquisition of services by the tennis club in having its courts resurfaced. This is not a supply made to the local council. In your case, the terms of Agreement B do not represent a binding obligation. While the project would not have proceeded without the contribution, per the terms of Agreement B, this still does not represent a binding obligation on your part, merely expectation where the project was ultimately completed, per Example 11. In your case, no goods or other benefits have passed between the parties, as you manage and maintain the results of the project, which are for public use and enjoyment. As such, you have not made a supply, and the contribution is not consideration for a taxable supply. | Detailed Reasoning - Question 4: Following from Question 3, and per example 11 in GSTR 2012/2, the mere fact of using the contribution to engage third-party contractors to undertake works specified in Agreement B does not represent a taxable supply. The contribution has facilitated the acquisition of the services, and the acquisition of those services is not supply made to Organisation B.