Private ruling: GST and professional membership fees
Date of advice: 7 July 2016
Published: August 2016

Ruling: Q1: Are you liable to pay goods and services tax (GST) when the members pay the annual membership fee under the A New Tax system (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, you are not liable to pay GST when the members pay the annual membership fee because you are not registered and are not required to be registered for GST and therefore not making a taxable supply under section 9-5 of the GST Act. GST is payable on a taxable supply. Under section 9-5 of the GST Act, an entity makes a taxable supply if: a) the supply is made for consideration; and b) the supply is made in the course or furtherance of an enterprise that the entity carries on; and c) the supply is connected with the indirect tax zone (Australia); and d) the entity is registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. You satisfy paragraphs 9-5(a) to 9-5(c) of the GST Act as you are making a supply of services in return for the membership fee and therefore you have received consideration for your supply; further you make the supply in the course of an enterprise that you carry on in Australia and the services are performed in Australia. The supply of services in Australia is also neither a GST-free nor an input taxed supply. Under section 23-5 of the GST Act you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration threshold which currently is $75,000 and $150,000 for non-profit organisation. You currently are not registered for GST and are not required to be registered for GST as your annual turnover is below the GST registration threshold. Paragraph 9-5(d) of the GST Act is not satisfied. Your supply of services is therefore not a taxable supply under section 9-5 of the GST Act since all the requirements in that section are not met. Your supply is outside the scope of GST and you are not liable to pay GST on that supply. Note : If you choose to register for GST, your supply will satisfy all the requirements in section 9-5 of the GST Act and the supply will be a taxable supply. You will be liable to pay GST on the taxable supply.

Relevant facts and circumstances: You are an incorporated association located in Australia and are not registered for GST. Your primary purpose is to promote the education of individuals for the improvement and development of their capabilities You are affiliated with a Global Association (GA) and are an independent entity from any other association, enterprise or entity. The headquarters for GA is located overseas. When joining or renewing membership of GA, members are required to also join a local association where one exists in close proximity to their location of residence. You are the local association for GA members residing in Australia. Your members are individuals and would not be registered for GST. Your members are bound by your Bylaws and are entitled to: • attend and vote at all general meetings of the association; • attend all Professional Development sessions of the association subject to the rules of such sessions; • offer himself or herself for election to the Association Board of Directors; and • offer himself or herself for membership of any committee of the association. The membership fee is made up of two components, the GA Association membership fees and the Australian local association. The full fee is collected by GA and GA subsequently makes a monthly EFT payment to you of the Local association dues that have been collected during the month. For example, the standard membership would consist of an amount of money for GA plus an amount of money for the local association. The amount of money for the local association is then provided to you by an EFT payment. The monthly payment to you is used to fund local association activities, for example, Professional Development sessions which the member is entitled to receive for being a member of your association. The Professional Development sessions are run free of charge. When a training course is run a fee may be charged if required to cover costs. No fees were charged last year. Your annual turnover for your membership subscription is less than $75,000.

Relevant legislative provisions: A New Tax system (Goods and Services Tax) Act 1999 section 9-5 | A New Tax system (Goods and Services Tax) Act 1999 section 23-5