Goods and services tax (GST) is a broad based tax of 10% on the sale of most goods, services and anything else consumed in Australia.
Registering for GST
If your NFP organisation has a GST turnover of $150,000 or more, it must register for GST.
If your organisation has a GST turnover of less than $150,000, it can choose to register for GST. The decision to voluntarily register for GST should be made based on your organisation's administrative needs.
Generally, an organisation must then stay registered for at least 12 months, even if its GST turnover is less than $150,000.
If your organisation is registered (or required to be registered) for GST, it generally includes GST in the price of most goods and services and anything else it sells.
Being registered for GST means that your organisation:
- must pay the GST on its taxable sales to us
- can claim GST credits for any GST included in the price of its business purchases
- must complete a business activity statement to report the taxable sales and claim GST credits.
See also:
GST on vouchers
A voucher includes a voucher, token, stamp (but not a postage stamp), coupon or similar article, or prepaid phone card or facility that, when redeemed, entitles the holder to receive goods or services in accordance with its terms.
Broadly speaking, if you sell a voucher for its stated monetary face value and the holder is entitled to redeem it for goods or services up to that stated value, you do not account for the face value of the voucher on your activity statement until it is redeemed.
See also:
GST and gambling
Gambling includes:
- raffles
- lotteries
- gaming machines in clubs
- betting on racing and other events.
Gambling sales are taxable, but you only apply GST to your margin – not to individual gambling sales.
To work out your margin:
- work out the total amount you received in gambling event wagers for the tax period
- subtract the total monetary prizes you paid for the tax period.
If the total wagered amount you received is more than the total amount of monetary prizes you paid, you must pay GST of one-eleventh of this margin.
Example: GST on gambling sales
A GST registered NFP organisation receives $83,000 in bets through the gaming machines it owns and pays out $50,000 in cash prizes in one tax period. The margin on the club's sales for GST purposes is $33,000 ($83,000 – $50,000).
The club will need to pay $3,000 GST ($33,000 x 1/11) on its gambling sales for this tax period.
End of exampleYou do not include the value of non-monetary prizes, such as a car, when you work out your margin. You can only deduct monetary prizes from the total amount wagered.
Example: GST on raffle ticket sales
A GST registered NFP organisation raffles a car and collects $44,000 from ticket sales. As the car is not a monetary prize, the margin for holding the raffle would be $44,000. The club will need to pay $4,000 GST ($44,000 x 1/11) to us.
End of exampleIf you receive a monetary donation that you use as a prize in a raffle or competition, you include the value of the prize in your margin.
If you receive a non-monetary donation that you use as a prize in a raffle or competition, you do not include the value of the prize in your margin.
See also:
Lucky badge member draws
In a lucky badge member draw, a club member's registration/membership number is drawn at random. If that member is present, they win a cash prize. If the member is not present, the prize jackpots by the cash amount until the prize is won in a later draw. Lucky badge member draws are only open to members. No tickets are purchased. Members simply have to be present when the draw is undertaken.
A lucky badge member draw is a gambling event because it is a contest where the outcome is determined by chance. The club will need to take into account monetary prizes given to members in calculating its margin when determining the GST liability of its gambling sales.
See also:
- GSTR 2002/3A2 Goods and services tax: prizes
GST rebate on gaming machines
The 'GST rebate' is a payment made to NSW clubs by the NSW Government to help the clubs with the impact of the GST on their gaming machine revenue. The payment is based on actual gaming profits for the previous three months and paid quarterly.
The GST rebate is a result of an external party arrangement – that is, the memorandum of understanding between the NSW Government and Clubs NSW. Clubs do not have to separately register or make a claim for the payment as the information is collected using data matching.
The payment is not a reduction in a club's GST liability on its gaming machine revenue, because the GST law does not include a rebate on GST.
The GST rebate is not a taxable supply as the clubs are not required to supply anything, do anything or enter into an obligation to do anything to obtain it. Therefore there is no GST payable on the payment.
GST on tips and gratuities
If your organisation is registered for GST and receives tips that are voluntarily paid, your organisation does not have to:
- pay GST on the tips it pays to its employees or contractors
- report the tips it pays to its employees or contractors as income on its activity statement.
If your organisation does not pay all of these tips to its employees or contractors, your organisation must:
- pay GST on the tips it keeps as its business takings
- report this income on its activity statement.
If your organisation is registered for GST and receives tips that are non-voluntary (for example, for a pre-set amount, a surcharge or a service charge), your organisation must:
- pay GST on these tips
- report this income on its activity statement.
The effect of GST on taxable income
The effect of GST on the calculation of taxable income differs depending on whether your organisation is registered for GST, or is required to be registered.
Assessable income
If your organisation is registered for GST or is required to be registered, adjustments to assessable income may be needed to calculate the taxable income. Your organisation's assessable income will not include the GST payable on a taxable supply it makes.
Example: GST not included in assessable income
A recreational association is registered for GST. It makes taxable supplies of equipment to non-members for $220 per item. The price includes $20 GST.
The association's assessable income would include $200 for each item. The $20 GST would not be included.
End of exampleIf your organisation is not registered for GST and is not required to be registered, no adjustment for GST is needed in calculating taxable income.
Example: GST included in assessable income
A social club is not registered for GST and not required to be registered. It supplies equipment to non-members for $330 per item.
The club would include $330 per item as assessable income.
End of exampleDeductions
If your organisation is registered for GST or required to be registered, adjustments to deductions may be needed to calculate the taxable income. Your organisation's deductions will not include the GST credits to which your organisation is entitled.
Example: GST not included in deduction
A NFP club is registered for GST. It buys goods for $550 for a fundraising drive to non-members. It is entitled to a GST credit of $50 on the purchase.
The club's deduction would be $500. It cannot claim a deduction for the part of the purchase price that it can claim as a GST credit – in this case $50.
End of exampleIf your organisation is not registered for GST and is not required to be registered, no adjustment for GST is needed in calculating taxable income.
Example: GST included in deduction
A lobbying association is not registered for GST and not required to be registered. It buys goods for $220 to help in deriving its assessable income. The $220 included $20 GST. It is not entitled to a GST credit of $20 on the purchase.
The association's deduction would be $220.
End of exampleMutual receipts and GST turnover
While mutual receipts are not included in assessable income, they may be included in GST turnover.
Where a mutual receipt is related to an input taxed supply made by the supplier, it is not included in the GST turnover.