Private ruling: GST and fund-raising events
Date of advice: 30 October 2023
Published: 11 December 2023
Ruling period: XX XXX 20XX to XX XXX 20XX
Date scheme commenced: XX XXX 20XX

Ruling: Q1: Can the Entity A treat the sale of goods at their Events as input taxed supplies under section 40-160 of the A New Tax System (Goods and Service Tax) Act 1999 (Cth) (GST Act)? | A1: Yes, Entity A can treat the sale of goods as input taxed under section 40-160 of the GST Act.

Relevant facts and circumstances: You are registered for GST. You are an endorsed charity. You sell goods at an event for $20 or less.

Relevant legislative provisions: A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 11-15 | A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 40-160 | A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 40-165 | A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 176-1 | A New Tax System (Goods and Service Tax) Act 1999 (Cth) section 195-1

Reasons for decision: Summary: Subsection 40-160(1) of the GST Act allows an endorsed charity, a gift-deductible entity or a government school to choose to treat all supplies it makes, in connection with certain fund-raising events, as input taxed. Specifically, section 40-160 of the GST Act provides: (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. Entity A is an endorsed charity. [1] Therefore, we must determine whether Entity A's sales of goods are supplies made in connection with a fund-raising event. | Detailed Reasoning - Supplies in connection with a fund-raising event: Subsection 40-165(1) of the GST describes what is meant by a fund-raising event and states: (1) Any of these is a fund-raising event if it is conducted for the purpose of fund-raising and it does not form any part of a series or regular run of like or similar events: (a) a fete, ball, gala show, dinner, performance or similar event; (b) an event comprising sales of goods if: (i) each sale is for a *consideration that does not exceed $20 or such other amount as the regulations specify; and (ii) selling such goods is not a normal part of the supplier's *business; ... (emphasis added) However, subsection 40-165(2) of the GST Act provides that 'paragraph [40-165](1)(b) does not apply to an event that involves the sale of alcoholic beverages or tobacco products'. | Detailed Reasoning - Conducted for the purposes of fund-raising: Entity A conducts the Events solely for the purpose of fund-raising. | Detailed Reasoning - Does not form any part of a series or regular run of like or similar events: Subsection 40-165(4) of the GST provides that 'the Commissioner may determine, in writing, the frequency with which events may be held without forming any part of a series or regular run of like or similar events for the purposes of subsection (1)'. The Commissioner has determined in the Goods and Services Tax: Frequency of Fund-raising Events Determination (No. 31) 2016 that the frequency with which fund-raising events may be held without forming part of a series or regular run of like or similar events is 15 fund-raising events in any financial year. Entity A's Events do not form any part of a series or regular run like or similar events for the purposes of subsection 40-165(1) of the GST Act. | Detailed Reasoning - An event comprising of sales of goods: Subparagraph 40-165(1)(b)(i) of the GST Act provides that a fund-raising event includes an 'event comprising sales of goods if: ... each sale is for a *consideration that does not exceed $20...'. [2] We consider that subparagraph 40-165(1)(b)(i) of the GST Act is satisfied where the consideration for the individual item or good sold does not exceed $20. We consider that Entity A's Events compromise of sales of goods where each sale is for a consideration that does not exceed $20 for the purposes of subparagraph 40-165(1)(b)(i) of the GST Act. | Detailed Reasoning - Not a normal part of your business: Based on the information above, we consider that the Events are not a normal part of Entity A's business. Therefore, subparagraph 40-165(1)(b)(ii) of the GST Act is satisfied. | Detailed Reasoning - Conclusion: Based on our reasoning above, we consider that the Event is a fund-raising event under paragraph 40-165(1)(b) of the GST Act. Therefore, the supplies are made in connection with a fund-raising event as required by paragraph 40-160(1)(b) of the GST Act. Entity A may choose to treat the supplies made in connection with the Events as input taxed. Entity A must make the choice to treat each Event as input taxed under section 40-160 before making any sales. [3] This choice must be recorded in Entity A's records and retained for at least five years. [4] If Entity A does not make the choice to treat all of the supplies in connection with a fund-raising event as input taxed under section 40-160 of the GST Act, the supplies connected with these events will be treated under the normal GST rules. If Entity A elects to treat these events as input taxed under section 40-160 of the GST Act, they will not be entitled to claim input tax credits to the extent that the acquisitions made relate to the Events. [5] [1] GST Act sections 176-1(1)(a), (2)(a)-(b). [2] (emphasis added). [3] GST Act paragraph 40-160(1)(c). [4] GST Act paragraph 40-160(1)(d). See subsection 382-5(1) of the Taxation Administration Act 1953 . [5] Paragraph 11-15(2)(a) of the GST Act provides that 'you do not acquire the thing for a creditable purpose to the extent that: (a) the acquisition relates to making supplies that would be *input taxed ...' (emphasis added).