Private ruling: GST on supplies
Date of advice: 5 July 2018
Published: September 2018

Ruling: Q1: Is your supply of a raffle ticket in exchange for a voucher that was given for no additional payment as part of an earlier supply of raffle tickets subject to GST? | A1: No, your supply of a raffle ticket in exchange for a voucher that was given for no additional payment as part of an earlier supply of raffle tickets is not subject to GST. | Q2: Is your supply of food or beverage in exchange for a voucher with a stated monetary value that you give to internal sporting clubs for no consideration subject to GST? | A2: No, your supply of food or beverage in exchange for a voucher with a stated monetary value that you give to internal sporting clubs for no consideration is not subject to GST. The supply of goods on redemption of the voucher does not give rise to a taxable supply unless consideration in addition to the monetary value stated on the voucher is provided. Where additional consideration is provided, there is a taxable supply to the extent the additional consideration exceeds the monetary value stated on the voucher and the requirements for a taxable supply are otherwise satisfied. | Q3: Is your supply of food and/or non-alcoholic beverage or show tickets or Woolworths vouchers in exchange for loyalty rewards which your members earn for things such as attending your club subject to GST? | A3: No, your supply of food and/or non-alcoholic beverage, show tickets or Woolworths vouchers in exchange for loyalty rewards which your members earn for things such as attending your club are not subject to GST. As with answer 2, the supply of goods on redemption of the voucher does not give rise to a taxable supply unless consideration in addition to the monetary value stated on the voucher is provided. Where additional consideration is provided, there is a taxable supply to the extent the additional consideration exceeds the monetary value stated on the voucher and the requirements for a taxable supply are otherwise satisfied. | Q4: Are your supplies of complimentary non-alcoholic drinks to members while they are in the gaming room subject to GST? | A4: No, your supplies of complimentary non-alcoholic drinks to members while they are in the gaming room are not subject to GST. | Q5: If you have overpaid GST on these supplies are you entitled to a refund of the overpaid GST for the tax periods from May 2014? | A5: Yes, where you have overpaid GST on these supplies you are entitled to a refund of the overpaid GST for the tax periods commencing from 1 May 2014.

Relevant facts and circumstances: 1. You are a club registered for the goods and services tax (GST). As part of your normal business operations, you conduct raffle draws on certain days of the week and month. Vouchers are issued to members and visitors when they purchase a certain number of raffle tickets for a certain amount. For example, each raffle ticket is sold for $1 and when five raffles tickets are purchased the member/visitor is entitled to the five raffle tickets plus five raffle entries for the next day’s draw. If a member/visitor only purchases four raffle tickets and pays $4, this does not entitle them to free raffle entry tickets. When the five free raffle tickets are redeemed in the next day’s draw, you report these vouchers redeemed as sales revenue from raffles and subject to GST. 2. You provide complimentary non-alcoholic drinks to members while in the gaming room. The only requirement is the members’ membership card. In the gaming machine, there is a button where the member player presses to request a drink. In order for this button to function, a member’s card must be inserted in the machine. There is no voucher issued for this. 3. Members earn loyalty rewards such as bonus points on the following occasions: ● when swiping their membership cards upon entry to the premises ● when playing poker machines ● when purchasing food and drinks ● when the Club has promotional campaigns ● on members’ birthday month and many more. The bonus points accumulated have an equivalent monetary value which members can utilise to redeem food or beverages items. The loyalty points are only redeemed for food and/or non-alcoholic beverages, show tickets or as prizes such as supermarket vouchers but not money. 4. You support internal sports clubs such as the darts club, snooker club, indoor bowls and many others. The internal sports clubs are run by your members. To be eligible to be a member of these sports clubs, the person must be a club member. These sports clubs members meet at the club and play their sports. You provide them with club vouchers with a stated monetary value and valid for three months, which the holders are entitled to redeem at the Bistro or Café for food and/or beverages, (these are the vouchers you print and supply. You do not purchase these vouchers). The vouchers provided to the internal sports clubs are used as prizes for games.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999, Section 7-1 | A New Tax System (Goods and Services Tax) Act 1999, Section 9-5 | A New Tax System (Goods and Services Tax) Act 1999, Section 9-10 | A New Tax System (Goods and Services Tax) Act 1999, Section 9-17(1) | A New Tax System (Goods and Services Tax) Act 1999, Division 100 | A New Tax System (Goods and Services Tax) Act 1999, Section 100-5 | A New Tax System (Goods and Services Tax) Act 1999, Division 142 Schedule 1 to the Taxation Administration Act 1953, section 105-65 of | Schedule 1 to the Taxation Administration Act 1953, section 155-40 of

Reasons for decision: Summary: Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on taxable supplies. Under section 9-5 of the GST Act, you make a taxable supply if: ● you make the supply for consideration; ● the supply is made in the course or furtherance of an enterprise that you carry on; ● the supply is connected with the indirect tax zone; ● you are registered or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. To satisfy the first requirement in section 9-5 of the GST Act, an entity must make a 'supply' for 'consideration'. Subsection 9-15(1) of the GST Act provides that for GST purposes, the term 'consideration' includes any payment, act or forbearance, in connection with, in response to, or for the inducement of a supply of anything. | Detailed Reasoning - Vouchers: The supply of a voucher will be a taxable supply where the requirements of section 9-5 of the GST Act are met. Division 100 of the GST Act operates to effectively defer the taxing point for supplies of vouchers until the voucher is redeemed. Section 100-5 of the GST Act achieves this by providing that where a voucher falls within the statutory definition of a voucher in section 100-25 of the GST Act, the supply of that voucher will not be a taxable supply where two requirements are satisfied: • on redemption, the holder of the voucher is entitled to supplies up to a monetary value stated on the voucher (paragraph 100-5(1)(a) of the GST Act), and • the consideration for the supply of the voucher does not exceed the monetary value (paragraph 100-5(1)(b) of the GST Act). Subsection 100-25(1) of the GST Act defines a voucher as any voucher, token, stamp, coupon or similar article or a prepaid phone card or facility the redemption of which in accordance with its terms entitles the holder to receive supplies in accordance with those terms. The Commissioner of Taxation sets out his view of how the GST Act applies to vouchers in Goods and Services Tax Ruling: Vouchers (GSTR 2003/5). GSTR 2003/5 explains that determining whether a voucher is one to which Division 100 of the GST Act applies, involves a two-step process. Firstly, the voucher must fall within the meaning of 'voucher' in section 100-25 of the GST Act (see paragraphs 20 to 54 of GSTR 2003/5) and secondly, that the voucher must satisfy the further requirements contained in section 100-5 of the GST Act (paragraph 56 of GSTR 2003/5). It is the Commissioner's view at paragraphs 57 and 58 of GSTR 2003/5 that section 100-5 of the GST Act only applies when the supply of the voucher would be a taxable supply under the basic rules of the GST Act. One requirement for a supply to be taxable is that it must be made for consideration. For section 100-5 of the GST Act to apply there must be consideration for the supply of the voucher. If there is no consideration for the supply of the voucher, section 100-5 of the GST Act does not apply and the basic rules apply. Where section 100-5 of the GST Act does not apply, the other provisions of Division 100 of the GST Act also do not apply. At paragraph 58 of GSTR 2003/5, the Commissioner refers to vouchers donated by an entity to a charity or given away, as an unsolicited gift or unsolicited promotional item (non-charity) as examples of vouchers to which section 100-5 of the GST Act does not apply. | Detailed Reasoning - Complimentary non-alcoholic drinks: As stated above, the first requirement for a taxable supply is for an entity to make the 'supply' for 'consideration'. In your case, you provide complimentary non-alcoholic drinks to members while in the gaming room. As the members do not provide consideration for the drinks, the supply is not subject to GST. | Detailed Reasoning - Supply of goods on redemption: Where a voucher is given away for no consideration, section 100-5 of the GST Act does not apply and therefore, the other provisions of Division 100 of the GST Act also do not apply. The supply of such a voucher is not a taxable supply under section 9-5 of the GST Act because the supply is not for consideration. The supply of goods on redemption of such a voucher does not give rise to a taxable supply unless consideration in addition to the monetary value stated on the voucher is provided. Where additional consideration is provided, there is a taxable supply to the extent the additional consideration exceeds the monetary value stated on the voucher and the requirements for a taxable supply are otherwise satisfied. Example 10 in GSTR 2003/5 provides: Example 10: voucher supplied for no consideration 61. Retailers Galore opens a new store in a shopping complex in Brisbane. As part of their opening celebrations it is decided that on the first morning the new store is open they will have two of the local football club's cheerleaders walk around the shopping complex handing out $5 gift vouchers specially printed for the day. The gift vouchers entitle the holder, on redemption, to supplies up to the stated monetary value of $5. The vouchers meet the requirements of section 100-25. 62. The gift vouchers are given away for no consideration. Section 100-5 does not apply and therefore, the other provisions of Division 100 also do not apply. The supply of such a gift voucher is not a taxable supply under section 9-5 because the supply is not for consideration. There will be no GST on the supplies on redemption of the voucher unless consideration is given in addition to the voucher by the holder and the other requirements for a taxable supply are satisfied. In your case, as no consideration is received for the vouchers you provide to members, internal sports clubs and guests, Division 100 of the GST Act does not apply. As Division 100 of the GST Act does not apply in this case your supplies on redemption (of the vouchers) are subject to section 9-5 of the GST Act. Based on the information provided, your supplies are not taxable supplies and no GST is payable as no consideration is received. This means that GST is payable only to the extent that consideration is given for goods on redemption of the vouchers in addition to the monetary value stated on the voucher and the supply of goods otherwise satisfies the requirements of a taxable supply. | Detailed Reasoning - Refunding overpaid or excess GST: For tax periods commencing before 31 May 2014, where GST has been paid on a supply that should not have been treated as a taxable supply to any extent, the Commissioner need not refund the overpaid GST, or apply the amount against tax debts, if either of the following applies: (a) the Commissioner is not satisfied that the recipient of the supply has been reimbursed by the supplier for the incorrectly imposed GST, or (b) the recipient of the supply is registered or required to be registered [Section 105-65 of Schedule 1 to the Taxation Administration Act 1953 (TAA)]. The Commissioner considers that the words "need not", in the context of section 105-65 of Schedule 1 to the TAA, do not prohibit the giving of a refund and accordingly the Commissioner has discretion to pay a refund in appropriate circumstances. The discretion should be exercised where it would be fair and reasonable to do so. MT 2010/1 Miscellaneous tax: restrictions on GST refunds under section 105-65 of Schedule 1 to the Taxation Administration Act 1953 states that the circumstances in which the Commissioner considers it may be fair and reasonable to exercise the discretion include, but are not limited to, the following: ● the overpayment arose as a direct result of the actions of the Commissioner, and the ● supplier has not had the opportunity to factor in the cost of the GST or otherwise pass it on, ● the supplier can demonstrate that, for other reasons, they did not otherwise pass on the GST, or ● an amount corresponding to the refund will be, or has been, passed on to the party that ultimately bore the cost of the overpaid GST. In your case, the Commissioner accepts that as no consideration was paid for your supplies that are the subject of this ruling, you have not passed on the overpaid GST. Consequently the Commissioner exercises his discretion under section 105-65 of Schedule 1 to the TAA to refund the overpaid GST for the relevant period. Division 142 of the GST Act provides that an excess amount of GST will not be refunded where that refund would result in a windfall gain for an entity. Division 142 of the GST Act applies in working out the net amount for tax periods starting on or after 31 May 2014. For monthly taxpayers, this means tax periods starting 1 June 2014. Division 142 of the GST Act replaced section 105-65 of Schedule 1 to the TAA. A supplier may overpay an amount of GST by incorrectly: ● treating a GST-free or input taxed supply as a taxable supply (this would include incorrectly apportioning the taxable and non-taxable components of a mixed supply) ● treating a transaction or arrangement which is not a supply as a taxable supply ● calculating the amount of GST payable on a supply, or ● reporting an amount of GST on a GST return. Where GST has been overpaid, Division 142 of the GST Act provides that the excess GST is only refundable in certain circumstances. Generally, a refund of overpaid GST can only be claimed if: ● the GST was not "passed on" to the recipient, or ● if the GST was passed on, the supplier has reimbursed that amount to the recipient. In your case, the Commissioner accepts that as no consideration was paid for your supplies that are the subject of this ruling, you have not passed on the excess GST. Consequently you are not prevented from recovering the excess GST amount, as per Note 2 at the end of sub section 142-10 of the GST Act for tax periods in question. Please note: that there is a four year time limit in relation to amending activity statements. For tax periods commencing on or after 1 July 2012 the four year time limit is referred to as the period of review (POR) and ends 4 years and 1 day from the date the original activity statement was lodged (section 155-40 of Schedule 1 to the TAA). This means you can only revise activity statements that are still within the POR. You may proceed with lodging amendments to your activity statement provided the amendments are made within the POR of the relevant tax period. Alternatively, you may claim the total amount in the current activity statement provided you lodge the current activity statement within the POR of each of the relevant tax periods in which the overpayment was made.