GST issues registers
Motor vehicle industry partnershipIssue 11 - Vehicles provided for evaluation, product launches, raffles, etc
11.a. When does a taxable supply occur?
Under section 9-5 of the GST Act, a taxable supply occurs if, among other conditions, there is a supply for consideration. Consideration is defined in section 9-15 to include any payment, or any act or forbearance in connection with the supply of something. Therefore consideration is not limited to the payment of money. Under section 9-75, the value of a taxable supply, where the consideration is not expressed in an amount of money, is based on the GST-inclusive market value of the consideration.
Therefore, where there is a supply and something is received from the recipient in return for the supply, a taxable supply takes place. The something in return may be a monetary payment, or for example, an evaluation report (an act) or an undertaking to display the vehicle (an act). There must be some outcome that flows back to the supplier.
However, whether a taxable supply takes place will depend on the facts of the particular circumstance.
| The examples for this issue are a public ruling for the purposes of the Taxation Administration Act 1953 and can be found here. |
11.b. How is the value of the taxable supply calculated?
For source of ATO view, refer to principles in GSTR 2001/6 - Goods and services tax: non-monetary consideration.
Once it is established that there is a taxable supply, it is then necessary to determine the GST-inclusive market value of the consideration in order to calculate the GST payable. In the above examples, the consideration would be valued as follows:
- •
- Appraisal or evaluation - the appraisal or evaluation amount.
- •
- Advertising benefit - the amount you would have to pay to receive identical advertising.
GST payable by the dealer is 1/11th of the market value (including GST) of the consideration received as consideration for the market value of the supply of the vehicle.
GST payable by the recipient of the vehicle is 1/11th of the market value (including GST) of the use/supply of the vehicle received as consideration for the supply of the advertising.
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