Private ruling: Treating a fund-raising event as input taxed.
Date of advice: 6 June 2018
Published: August 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 13 November 2016

Ruling: Q1: Are the supplies made by you in connection with an event held by you to raise funds to restore equipment input taxed supplies under section 40-160 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. ● You are registered for goods and services tax (GST). ● You are an ACNC registered charity and an endorsed charity for tax purposes. ● You held a one-off event in 2016 to raise funds for the restoration of equipment (‘Equipment Restoration event’). ● You advised in your correspondence issued in March 2018 and May 2018 that: - You conducted several events in the course of the 2016 and 2017 calendar years and: in all cases, except the ( Equipment Restoration ) event a minute was raised in order to make an election for each event to be treated as an input taxed supply. It was simply an oversight on behalf of … that this written election was not made for this particular event (being the Equipment Restoration event). – A separate bank account was opened up to receive sponsorships and donations for the equipment restoration. – You did not charge GST on any of the supplies that you made in connection with the Equipment Restoration event. – You did not issue tax invoices to the sponsors of the Equipment Restoration event for funds received from them to restore the equipment. – You inadvertently claimed a small amount of input taxed credits (GST credits) in one of your 2016 Business Activity Statements (BAS) which related to costs connected with the Equipment Restoration event.

Relevant legislative provisions: All legislative provisions refer to the GST Act unless otherwise stated. ● Section 40-160 | ● Section 40-165

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. The supplies made by you in connection with the event held by you to raise funds for the restoration of equipment are not input taxed supplies under section 40-160 of the GST Act. | Detailed Reasoning - Detailed reasoning: Section 40-160 of the GST Act provides for fund-raising events conducted by endorsed charities, etc. The section states as follows: (1) A supply is input taxed if: (a) the supplier is an *endorsed charity, a *gift-deductible entity or a *government school; and (b) the supply is made in connection with a *fund-raising event; and (c) the supplier chooses to have all supplies that it makes in connection with the event treated as input taxed; and (d) the event is referred to in the supplier's records as an event that is treated as input taxed. … The meaning of a ‘fund-raising event’ for GST purposes is set out in section 40-165 of the GST Act. The remaining terms marked with an asterisk above are a defined term listed in section 195-1 of the GST Act. How this applies to you: You held a fund-raising event to raise funds to restore equipment (Equipment Restoration event). We considered the circumstances and activities of the Equipment Restoration event and applied them to section 40-160 of the GST Act. We are satisfied that you meet the requirements of paragraph 40-160(1)(a) of the GST Act as you are an endorsed charity. However we are not satisfied that you meet the requirements of paragraph 40-160(1)(c) or (d) as: ● Paragraph 40-160(1)(c) of the GST Act: Although you advised you did not include GST on any of the supplies you made in connection with the Equipment Restoration event, you did claim some of the GST credits in relation to costs connected with the event. This shows that you did not make a clear choice to have all supplies you made in connection with the Equipment Restoration event treated as input taxed. ● Paragraph 40-160(1)(d) of the GST Act You are required to make a note in your records of your decision to treat the Equipment Restoration event as an input taxed event. You advised that you had made similar recordings via a minute in your records for other events but did not make a recording of any choice in your records for the Equipment Restoration event. We are not required to consider whether the Equipment Restoration event satisfies the requirements of a ‘fund-raising event’ for GST purposes under paragraph 40-160(1)(b) and section 40-165 of the GST Act as the Equipment Restoration event was a one-off event and there is sufficient information to confirm that you have not satisfied the requirements of section 40-160 of the GST Act. Contentions: You contend that we should allow you to treat the Equipment Restoration event as an input taxed fund-raising event under section 40-160 of the GST Act because you always choose to treat your fund-raising events as input taxed and it was simply an oversight that you did not do so with this particular event. You also contend that the amounts of GST credits you claimed in relation to acquisitions made in connection with the event were minor. Our response: GST is a transaction based tax. The operation of the GST Act requires that the supplier determines whether there is a GST liability associated with the supply when the supply occurs. Therefore, where a choice is provided under the GST Act which affects the treatment of a particular supply, that choice must be made prior to making the supply. Consequently, you were required to choose to have all supplies that you make in connection with the Equipment Restoration event treated as input taxed under section 40-160 of the GST Act prior to the first supply of the event occurring. Each event must be considered separately. Your decision to treat other fund-raising activities as input taxed has no connection with the requirement to make and record a choice in relation to the Equipment Restoration event. The amount of GST credits that you reported in your 2016 BAS is more likely to indicate that a choice to treat the Equipment Restoration event as input taxed was not made. Although you mention that the reporting of GST credits was an inadvertent mistake, you have still not made a record of a decision to treat the Equipment Restoration event as input taxed. Summary: We have concluded that you have not made a record of a choice being made to treat the Equipment Restoration event as an input taxed event under section 40-160 of the GST Act. Therefore your supplies relating to the Equipment Restoration event will be taxable supplies and you will be entitled to claim GST credits on your creditable acquisitions unless another provision of the GST Act provides a different GST treatment.

Reasons for decision: These reasons for decision accompany the Notice of private ruling for you.