GST for Sponsorships Workshop
Transcript of GST for Sponsorships Workshop
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The GST
Anne Harvey – Group Tax Manager, Corporate Finance
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Objectives
• Provide an overview of GST and how it relates to fundraising and sponsorships at UNSW
• Understanding when to apply GST
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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
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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
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Registration
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How Does GST work
Supplier
Raises Tax
Invoice
Purchaser
Receives Tax
Invoice
Sponsor
UNSW
Sponsor
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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
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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
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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
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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
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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
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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
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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