Private ruling: GST registration
Date of advice: 4 October 2016
Published: November 2016

Ruling: Q1: Are you required to register for goods and services tax (GST) when you receive the accumulated funds from A totalling $X? | A1: No.

Relevant facts and circumstances: You are a non-profit entity. You are not registered for GST. X was established in 20XX. Its auspicing body was A, an incorporated and GST registered agency run by the Z Church. A managed the affairs including finances of X. X registered as an incorporated body to become Y (you) in 20XX. In X 20XX, A transferred to you the accumulated funds of X totalling $X. The revenue of X from X 20XX to X 20X, including the funds transfer of $X, is approximately $Z. It is likely that at some point before X 20XX this will exceed $150,000. You are requesting advice whether you will be required to register for GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-10 | A New Tax System (Goods and Services Tax) Act 1999 Section 9-15 | A New Tax System (Goods and Services Tax) Act 1999 Section 23-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 188-10 | A New Tax System (Goods and Services Tax) Act 1999 Section 188-15 | A New Tax System (Goods and Services Tax) Act 1999 Section 188-20 | A New Tax System (Goods and Services Tax) Regulations Regulation 23-15.02

Reasons for decision: Summary: Under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) an entity is required to be registered if it: • carries on an enterprise; and • the annual turnover meets the registration turnover threshold. Regulation 23-15.02 of A New Tax System (Goods and Services Tax) Regulations specifies that the registration turnover threshold for non-profit bodies is the amount of $150,000. Section 188-10 of the GST Act deals with whether your annual turnover meets or does not exceed a turnover threshold. Subsection 188-10(1) provides that you have an annual turnover that meets a particular turnover threshold if: (a) your current annual turnover is at or above the turnover threshold, and the Commissioner is not satisfied that your projected annual turnover is below the turnover threshold; or (b) your projected annual turnover is at or above the turnover threshold. Section 188-15 of the GST Act explains that the current annual turnover threshold is calculated at a time during a particular month from the sum of the values of all the supplies that the entity has made, or is likely to make, during the 12 months ending at the end of that month, other than supplies that are input taxed, not for consideration, not in connection with the entity's enterprise or not in connection with Australia. Section 188-20 of the GST Act explains the projected annual turnover is calculated at a time during a particular month as the sum of the values of all the supplies that the entity has made, or is likely to make, during that month and the next 11 months, other than supplies that are input taxed, not for consideration, not in connection with the entity's enterprise or not in connection with Australia. In both current and projected annual turnovers, there must first be a supply/anticipated supply in return for which consideration is or will be received before the value of the supplies are calculated and/or estimated. 'Supply' is defined under section 9-10 of the GST Act as any form of supply whatsoever. On the other hand, section 9-15 of the GST Act defines 'consideration' to include any payment, or any act or forbearance in connection with, or in response to or for the inducement of a supply of anything. According to subsection 9-10(2) of the GST Act, a supply can be any of the following: (a) a supply of goods; (b) a supply of services; (c) a provision of advice or information; (d) a grant, assignment or surrender of real property; (e) a creation, grant, transfer, assignment or surrender of any right; (f) a financial supply; (g) an entry into, or release from, an obligation: • to do anything; or • to refrain from an act; or • to tolerate an act or situation; (h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g). In adopting the ordinary and natural meaning of the term 'supply', that is, 'to furnish or provide', it follows that an entity must take some action to make a supply. This notion is consistent with the use of active phrases throughout the examples of supplies in section 9-10 of the GST Act, such as the normalised verbs: 'a provision', 'a grant', 'a creation', 'a transfer', 'an entry into', and 'an assignment'. You did not make a supply of goods or services to A for which you received the $X nor do you have an obligation to do, or refrain from doing, anything when you received the payment. As such, the payment is not consideration for a supply which you make. In your situation, you have not received $X as a result of any supply of goods or services made by you nor do you have an obligation to do, or refrain from doing, anything when you received the payment. It represents the transfer of accumulated funds from the non-incorporated entity. As you have not made any supply for the $X it does not represent a value of a supply and is disregarded from inclusion in your GST turnover. If your current and projected GST turnover does not reach or exceed the $150,000 GST turnover threshold, you are not required to register for GST.