Private ruling: GST - government funding
Date of advice: 1 February 2021
Published: March 2021
Ruling period: DD MM YYYY to DD MM YYYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Is the grant payment received by a government entity, by way of funding under an Agreement, from another government entity, the provision of consideration under subsection 9-17(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, the grant payment received by the government entity, by way of funding under an Agreement by another government entity, is not the provision of consideration for a supply. Subsection 9-17(3) of the GST Act provides that a payment is not the provision of consideration if: a) The payment is made by a government related entity to another government related entity for making a supply, and b) The payment is covered by an appropriation under an Australian law, and c) The payment is calculated on the basis that the sum of: i. the payment (including the amounts of any other such payments) relating to the supply; and ii. anything (including any payment for any act or forbearance) that the other government related entity receives from another entity in connection with, or in response to, or for the inducement of, the supply, or for any other related supply; does not exceed the supplier's anticipated or actual costs of making those supplies. Based on the facts of this case, the payment made by the government entity to another government entity will meet all the requirements of subsection 9-17(3) of the GST Act and therefore is not the provision of consideration for a taxable supply.

Relevant facts and circumstances: One government entity provides funding to another government entity under an Agreement to undertake a project. In accordance with the terms of the Agreement, a Recipient Created Tax (RCTI) is issued by the government entity funding the project to the other government entity. The GST amount on the RCTI is shown as $0.00. The funding government entity confirms the funding is an appropriation and is not subject to GST. The funding does not exceed the costs of undertaking the project.

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 subsection 9-17(3)