Private ruling: GST and funding
Date of advice: 11 October 2018
Published: December 2018

Ruling: Q1: Is the funding you receive from Government entity consideration for a taxable supply that you make? | A1: Yes, the funding you receive from Government entity is consideration for a taxable supply that you make.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You have entered into a Funding Agreement with Government entity.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 (GST Act) section 9-5

Reasons for decision: Summary: Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) you make a taxable supply if: ● you make a supply for consideration ● the supply you make is made in the course or furtherance of an enterprise that you carry on, ● the supply is connected with the indirect tax zone, and ● you are registered or required to be registered for GST. However, the supply is not a taxable supply to the extent it is GST-free or input taxed. What is in question in this transaction is whether there is a supply for which consideration has been provided. In this case, Government entity provided and will provide consideration (funding). The Funding Agreement outlines what this funding is provided for. Government entity is providing the consideration for you to build dwellings in your area. This is a required activity and also specifies that if the amount of funding is insufficient you are still required to complete the activity. Government entity is contracting with you to perform your obligations under the agreement for which consideration is provided. The supply is made in the course of your enterprise that you carry on and it is connected with Australia. As you are registered for GST, the supply is a taxable supply. As such, you are required to remit 1/11 of the total funding received to the Tax Office.