GST for Sponsorships Workshop

The GST

Anne Harvey – Group Tax Manager, Corporate Finance

Objectives

• Provide an overview of GST and how it relates to fundraising and sponsorships at UNSW

• Understanding when to apply GST

What is GSTGoods and services tax (GST) is a broad based tax of 10% on most

goods, services and other items sold or consumed in Australia.

GST is a tax on transactions.

Registration Annual turnover $75,000 or more Non Profit organisation - if annual turnover $150,000 or more Optional if below these thresholds

When is it applicable• Taxable sales

price includes GST pay GST on sales claim GST on purchases 1/11th of Total invoice/sale price

• Taxable supply for consideration in course of furtherance of carrying on

enterprise connected with Australia registered or required to be registered not GST free or input taxed

When is it not applicable • GST free sales

Basic food - meat, milk, bread, fruit and vegetables

Most education, child care, health

Some exports

• Input Taxed sales Residential property Financial transactions Cannot claim GST credit

When does GST apply

Registration

How Does GST work

Supplier

Raises Tax

Invoice

Purchaser

Receives Tax

Invoice

Sponsor

UNSW

Sponsor

Supply• Any form of supply• Supply of goods• Supply of services• Provision of advice or information• Grant, assignment or surrender of real

property• Creation, grant, transfer, assignment or

surrender of any right• Financial supply• Entry into or release from an obligation to

do anything, refrain from act, to tolerate act

• Does not include supply of money unless consideration

Consideration • Any payment or any act or forbearance, in

connection with a supply of anything• Any payment, or any act or forbearance, in

response to or for the inducement of a supply of anything

• Does not matter if voluntary, or by recipient of supply

• Does not matter if court order/ other body• Does not matter if relates to settlement

proceeding before court /other body

• Gift to Non Profit body – not consideration

Taxable Supply and Consideration

Concession1. Gift – No GST2. Donated second hand goods– Sale GST

free3. Fundraising event – can treat as Input

Taxed

4. Raffles and bingo tickets – GST free5. Non commercial activities – payment less

than set amount – GST free6. Reimburse Volunteer expenses – claim GST

credit

Comment1. Made voluntarily and no material benefit2. No change in original character of goods3. All sales associated with event as IT –

cannot claim GST credits for purchases, not charge GST on sales. Keep record of choice

4. Not contravene state or territory law5. < 50% GST inclusive Market value or

< 75% of amount paid to acquire goods6. Exact reimbursement of expense. Obtain

Tax invoice for purchase

GST Concessions - NFP

Gifts

What is a gift Made voluntarily - no obligation to pay, no contractual arrangement for NFP organisation to

use payment in a specific way Arises by way of benefaction – DGR is advantaged, without detriment to recipient No material benefit to payer – insubstantial value, cannot be put to a use, not marketable.

• Badge/ plaque - not material, • Advertising banners , display of logo/ name - material

What is the impact to the organisation if we charged GST erroneously? Gift does not meet rules for Taxable Supply and consideration. If no Tax Invoice, may not be able to claim ITC for GST If not registered for GST, cannot claim ITC Additional cost to them If registered for GST, may be able to claim ITC if Tax Invoice provided

Risk to UNSW if GST Not charged where Applicable

If Taxable Supply UNSW still have to remit 1/11th of total amount to ATO

Loss of revenue received by UNSW – only 10/11ths.

Audit risk – inadequate processes and controls

Penalties and Fines

Sponsorship

Sponsorship support provided in form of money – consideration

In return UNSW provide advertising, signage, naming right, or other material benefit (something of value) – supply

As UNSW registered for GST, it has to pay GST on sponsorship received

If sponsor registered for GST, claim Input Tax Credit for GST with Tax Invoice

Sponsorships of DGRs by commercial entities – Advertising benefit - GST

1. Sponsor representation on selection panel

2. Student Internship may be offered

3. Student Internship is mandatory4. Post Graduate Research student – research

of interest to Sponsor5. Scholar selected as area of research of

interest to Sponsor6. Capital Project - stipulate naming rights7. Event - Public recognition / Commercial

Advertising

8. Chair/ Fellowship9. Prize/ Award

GST Application/ Reasons1. Benefit to Sponsor ?

Right in say of recipient – GST Sponsor retains some control - GST

2. Privilege to Sponsor? Right to services – GST

3. Services of student , marketing – GST4. Research interest and benefit – GST

5. Research interest and benefit - GST Use of results - GST

6. Marketing benefit / obligation – GST7. Marketing benefit – GST

Mere acknowledgement of generosity/ plaque – No GST

8. Marketing benefit , attend function – GST9. Internships, attend function, membership - GST

Example

Sponsorship

Example

1. Ticket to fundraising dinner $1100 $1100 price to attend dinner

2. Ticket price to dinner $110 Additional donation of $200

3. Auction Purchase item for $550, value $300

GST

1. Ticket price includes GST of $100. Funds raised $1000

2. Ticket price includes GST of $10 $200 is gift – No GST

3. Amount paid $550 not voluntary, material benefit - not gift GST of $550/11 = $50

Fundraising

Questions

Contact: Anne Harvey - Ext 51635. Email: [email protected]