T_Extract-GST-Manual-for-Schools - Crowe Horwath International

GST Manual for Schools
Audit | Tax | Advisory

Welcome to the 4 th Edition of the
GST Manual for Schools.
From the very beginnings of GST in 1999, our office has been integrally involved in the delivery of assistance to the
education sector on all aspects of GST. Starting from the preparation of the very first GST Manual in 2000, and the
subsequent updates in 2004 and 2006, the firm has continued to support schools in dealing with their GST affairs.
In recognition of the 10th anniversary of the GST law in Australia, we have completely redesigned the GST manual and
released the most comprehensive update incorporating over 40% of new material.
This new version is specifically designed to provide an in-depth analysis of the GST issues affecting schools, while still
covering all the general GST issues that any new staff member needs to know. By bringing together all the knowledge
and experience gained since GST was introduced, the manual not only identifies but also addresses the complex GST
issues affecting schools by providing practical guidance on how to deal with them.
About Crowe Horwath Brisbane
The Brisbane office of Crowe Horwath has remained dedicated to providing a full suite of services to the education sector;
from audits and valuations, budgeting and forecasting, to FBT, GST and gift fund advice.
This depth of experience is reflected in the fact that the same staff members who wrote the first edition of the GST
manual in 2000 and subsequently delivered the training throughout Australia also wrote this update. That knowledge and
experienced gained through 10 years of advising on the practical solutions to issues affecting schools (through seminars,
GST reviews and ATO audits) has been incorporated into this new manual.
As author, we trust that you find this manual an invaluable resource and tool that you can continue to use as you deal
with your GST issues into the future. Should you have any feedback on the manual, we welcome your comments at
education@crowehorwath.com.au.
Mark Reynolds
Associate Principal – Brisbane
www.crowehorwath.com.au
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Disclaimer
This manual is intended as an information source only. The comments and extracts from legislation and other sources
in this publication do not constitute advice, whether legal or professional, and should not be relied upon as such. All
readers, whether purchasers or otherwise, should not act solely on the basis of the information contained in this manual
as they have been generalised and the tax law can apply differently to entities depending on their circumstances. Entities
should seek advice from a professional advisor regarding the application of any of the comments in this publication to
their particular circumstances.
Crowe Horwath, its Directors, employees, consultants, contractors and the author expressly disclaim any and all liability
to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any person
relying on any information in this manual.
GST Law
This manual is current as at 20 January 2011. All references to the GST law, rulings, cases, etc. contained in this manual
are current up to that date.
Copyright
WHK Pty Ltd trading as Crowe Horwath is a member of Crowe Horwath International, a Swiss verein (Crowe Horwath).
Each member firm of Crowe Horwath is a separate and independent legal entity. WHK Pty Ltd trading as Crowe Horwath
and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath or any other member of Crowe
Horwath and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath or any other
Crowe Horwath member.
© Copyright 2011 WHK Pty Ltd trading as Crowe Horwath (ABN 84 006 466 351).
All rights reserved. Except as permitted by the Copyright Act 1968, no part of these notes may be reproduced or
published in any form or by any means, whether electronic or mechanical, and including photocopying, recording, by
information storage or retrieval system, without the prior written permission from WHK Pty Ltd.
A school that has purchased this manual from Crowe Horwath is permitted to make the manual available to all the
employees of that respective school and make copies of the relevant schedules and parts of the manual for internal use
of that school only.
Associations of schools or an entity comprising a number of schools are not permitted to make a copy of this manual
available to multiple schools that are members of that association or entity without prior written permission.
Requests and inquiries concerning reproduction rights should be addressed to the Principal – Tax Advisory, Crowe Horwath
Brisbane, GPO Box 736, Brisbane Qld 4001, by email at education@crowehorwath.com.au or by phone on 07 3233 3423.
www.crowehorwath.com.au
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CONTENTS
1 GST Overview ............................... 7
1.1 GST and compliance ......................................... 7
1.2 GST and schools ............................................... 7
1.3 Overview of GST and Education ...................... 10
1.4 Taxable supplies .............................................. 14
1.5 Charities and GST ........................................... 15
1.6 GST Registration ............................................. 17
2 Recent Changes and ATO Audits ..20
2.1 Recent tax reviews ........................................... 20
2.2 ATO audit activity ............................................. 23
2.3 Risk management and GST ............................. 24
2.4 GST issues still causing concern ..................... 25
3 GST Fundamentals .................... 29
3.1 Basic GST rules ............................................... 29
3.2 How does GST work ........................................ 30
3.3 Who has to pay GST ........................................ 38
3.4 Entities ............................................................. 39
3.5 Enterprise ......................................................... 44
4 GST Registration ........................ 49
4.1 General registration issues .............................. 49
4.2 How to register for GST ................................... 50
4.3 Who is required to be registered ...................... 50
4.4 GST turnover ................................................... 50
4.5 What if an entity is required to be registered
but doesn’t ....................................................... 52
4.6 What are the commercial benefits of being
registered ......................................................... 53
4.7 What obligations does registration bring .......... 53
4.8 Cancellation of registration .............................. 53
4.9 Registration options ......................................... 55
4.10 The Australian Business Number rules ............ 66
5 Taxable Supplies ........................ 68
5.1 Taxable supplies .............................................. 68
5.2 Specific modification rules................................ 78
5.3 Adjustment provisions ...................................... 83
6 Creditable acquisitions.............. 89
6.1 Creditable acquisitions ..................................... 89
6.2 Input tax credits – creditable acquisition .......... 90
6.3 Special modification rules ................................ 94
6.4 Adjustment provisions .................................... 101
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7 Non-Taxable Supplies.............. 107
7.1 How GST applies to non-taxable supplies ..... 107
7.2 GST-free supplies .......................................... 108
7.3 Input taxed supplies ....................................... 123
8 GST-free Education Supplies ... 130
8.1 What is not ordinarily GST-free ...................... 130
8.2 Principles relating to GST-free education
supplies .......................................................... 131
8.3 Education courses ......................................... 132
9 Charity Provisions ................... 173
9.1 GST concessions ........................................... 173
9.2 Eligibility for concessions ............................... 176
9.3 Tuck shops or canteens ................................. 182
9.4 Fundraising by charities ................................. 185
9.5 Non-commercial rules for charities ................. 189
9.6 Donated second-hand goods ......................... 206
9.7 Raffles and bingos ......................................... 206
9.8 Non-profit sub-entities .................................... 207
10 Property and asset supplies ... 210
10.1 Types of assets .............................................. 210
10.2 Assets hired, leased or sold to students ........ 210
10.3 Trade-in of motor vehicles ............................. 211
10.4 Supply of residential property ........................ 212
10.5 Commercial and other property ...................... 216
10.6 Student accommodation ................................ 221
10.7 Non-student accommodation ......................... 223
11 Taxable supplies by Schools ... 227
11.1 Modifications to the GST treatment ................ 227
11.2 Grants to schools ........................................... 228
11.3 Sponsorships or advertising ........................... 235
11.4 Commissions ................................................. 236
11.5 Sale of goods ................................................. 236
11.6 Sale of food and beverages ........................... 239
11.7 Rent or hire of premises or capital assets ...... 241
11.8 Sale of capital assets and premises ............... 242
11.9 Camps and excursions................................... 243
11.10 Bus services ................................................... 244
11.11 Holding of events ........................................... 245
11.12 Membership fees ........................................... 247
11.13 Forfeited deposits .......................................... 248
11.14 Waiting list fees .............................................. 249
11.15 Other supplies ................................................ 250
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12 GST and Religious Supplies ... 252
12.1 GST-free supply of religious services ............ 252
12.2 Activities by religious practitioners ................. 255
12.3 GST Religious Groups ................................... 257
12.4 GST Branches ............................................... 258
12.5 Accommodation provided to religious
practitioners .................................................... 260
13 Special Topics .......................... 263
13.1 Apportionment of consideration or
acquisitions .................................................... 263
13.2 Agency ........................................................... 273
13.3 Donations and sponsorships .......................... 278
13.4 Prizes ............................................................. 286
13.5 Fines and penalties ........................................ 289
13.6 Appropriations ................................................ 291
13.7 Vouchers ........................................................ 291
14 GST and Associated Bodies ... 295
14.1 What bodies may be an associated entity ...... 295
14.2 Is the body an ‘entity’ for GST purposes ........ 296
14.3 What entities are associates .......................... 296
14.4 Tax status of associates ................................ 298
14.5 GST on supplies made by school .................. 303
14.6 Supplies by associated entities ...................... 308
15 Tax Invoices ............................. 312
15.1 Why are tax invoices so important ................. 312
15.2 Changes to tax invoice requirements ............. 312
15.3 Tax invoice requirements for supplies
less than $1,000 (GST inclusive) ................... 314
15.4 Tax invoice requirements for supplies of
$1,000 (GST inclusive) or more ..................... 314
15.5 Who can issue a tax invoice........................... 315
15.6 Recipient created tax invoices (RCTI) ............ 316
15.7 Adjustment notes ........................................... 318
15.8 Combination of tax invoices and adjustment
notes .............................................................. 320
15.9 Input tax credits on corporate credit card
statements (including fuel cards) ................... 320
16 Accounting for GST ................. 324
16.1 Tax periods .................................................... 324
16.2 Accounting treatment of GFST ....................... 326
16.3 Business Activity Statement and record
keeping .......................................................... 333
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17 Dealing with the ATO ............... 344
17.1 GST ruling system ......................................... 344
17.2 Correcting mistakes and amending BAS ....... 348
17.3 Integrity of systems for dealing with GST ....... 352
17.4 Price displays ................................................. 354
18 Other Tax Issues ...................... 356
18.1 Fringe Benefits Tax (FBT) .............................. 356
18.2 Pay As You Go (“PAYG”) ............................... 360
18.3 Registration as tax concession charities
and gift deductible entities ............................. 364
18.4 Gift deductible entities .................................... 364
18.5 Audit requirements ......................................... 370
18.6 Fuel tax credits ............................................... 371
18.7 Education tax refund ...................................... 372
19 School Transaction Summary... 375
19.1 GST treatment of income ............................... 375
19.2 Operation of special provisions ...................... 375
19.3 GST treatment of expenses ........................... 391
20 Quick Reference Material ........ 400
20.1 Fact sheets .................................................... 400
20.2 GST elections ................................................ 409
20.3 No ABN Withholding declaration .................... 412
20.4 Checklists ....................................................... 414
21 Relevant GST Legislation for
Schools ..................................... 420
22 Internet Sites ............................ 427
23 Glossary .................................... 428
24 Index .......................................... 431
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1. GST Overview
1. Overview .................................................................................................................................................................7
1.1 GST and Compliance ..............................................................................................................................................7
1.2 GST and schools .....................................................................................................................................................7
1.2.1 Identification of GST treatment ................................................................................................................................9
1.3 Overview of GST and Education ...........................................................................................................................10
1.3.1 Education courses .................................................................................................................................................10
1.3.2 Course curriculum .................................................................................................................................................11
1.3.3 School facilities ......................................................................................................................................................11
1.3.4 School excursions .................................................................................................................................................11
1.3.5 School administrative services ..............................................................................................................................12
1.3.6 Course materials ...................................................................................................................................................12
1.3.7 Student accommodation ........................................................................................................................................12
1.3.8 Non-student accommodation .................................................................................................................................13
1.3.9 Government grants ................................................................................................................................................13
1.3.10 School tuck shops .................................................................................................................................................13
1.3.11 Child care and outside school hours care .............................................................................................................14
1.4 Taxable supplies ...................................................................................................................................................14
1.5 Charities and GST .................................................................................................................................................15
1.5.1 Non-commercial supplies by charities ...................................................................................................................15
1.5.2 Fundraising by charities ........................................................................................................................................16
1.5.3 Non-profit sub-entities ...........................................................................................................................................16
1.6 GST Registration ...................................................................................................................................................17
1.6.1 Australian Business Number .................................................................................................................................18
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