Donations and bequests – GST fact sheet 7
There is no specific GST legislation or rulings in respect of donations and bequests. Goods and Services Tax Ruling GSTR 2000/11 – Grants of Financial Assistance, does deal with some issues that are relevant to donations and bequests.
The essential issue is whether there is a taxable supply. GST will only be payable in Relation to taxable supplies and therefore, the GST treatment of a donation or Bequest will depend on whether there is deemed to be consideration for a taxable Supply. Whilst this clearly depends on the individual circumstances and the facts of each case, below are a range of factors that will generally indicate whether GST is payable.
2.0 Donations and bequests
2.1 What is a taxable supply?
A taxable supply is defined in section 9-1 of the GST Act as a supply that is:
- made for consideration
- made in the course, or furtherance of, an enterprise that is carried on by the supplier
- connected with Australia, and
- made by an entity that is registered or required to be registered for the GST
All elements of a taxable supply should be considered when determining whether The donation or bequest attracts GST.
In determining whether a supply is made for consideration, the following three questions should be asked:
- is there a supply
- is there consideration, and
- does the necessary relationship exist between the supply and the consideration
2.2 Can the donation or bequest be considered a gift?
Paragraph 9-15(3)(b) specifically excludes a gift made to a non-profit body from being consideration for a supply.
A non-profit body is considered as a body (body politic), which is not carried on for the purpose of profit or gain to its individual members. RMIT University is a body politic that is not carried on for the purpose of profit or gain and is thus considered to be a non-profit body. Therefore, any gifts made to RMIT will not be GST Taxable.
GSTR 2000/11 considers the meaning of gift in paragraphs 57 to 69. It considers a gift to arise where : there is no prior contractual obligation to make the gift ; and the grantor does not receive any material advantage for making the gift.
The mere recognition of the donor of the gift by RMIT University would not of itself Be considered a material advantage (ie : a plaque on the wall) Where a donation or bequest has conditions attached that requires the funds to be Utilized in a certain way, this will not necessarily prevent the payment from being a gift.
Provided that this is only a statement of the terms on which the donor intends to make the donation or bequest and RMIT’s understanding of the terms on which the donation or bequest will be made.
For a quick reference to identify if GST applies to a donation or bequest, refer to Appendix A – Donations/bequests flowchart (PDF 69.94KB, 1p).[Next: Supporting documents and information ]