GST

The Good and Services Tax (GST) introduced from 1 July 2000 is complex, particularly for Religious Institutions, and will require much attention by Treasurers. The complexity arises as each activity requires consideration of the opportunities provided by the application of GST.

GST is a broad-based 10% tax on most supplies of goods and services in Australia.

The general rules, or starting point is that if a Parish receives income from any source, including barter transactions, it needs to consider whether the transaction is subject to GST. If the Parish should have charged GST, but did not, the Parish must still forward 1/11th of the funds received to the Australian Taxation Office (ATO). The liability remains with the Parish, even if it does not collect the GST.

Taxable Supplies

GST is only charged on taxable supplies. To be a taxable supply, on which a Parish must remit GST, the following criteria must be met:

The Parish must be GST registered,
There must be a supply of goods and services,
The supply must be connected with Australia,
There must be consideration paid or payable by the buyer,
The supply must not be GST Free, and
The supply must not be input taxed.

Most goods and services supplied in Australia by a registered business will be taxable supplies. Certain Parish transactions, the most common of which are offerings, donations, proceeds of bequests, payment of stipends, wages, allowances, superannuation and long service leave are not subject to GST.

Parishes registered for GST will generally charge 10% GST when making a taxable supply. Parishes will also be charged GST by suppliers on goods and services purchased. The difference between the GST charged on supplies made and GST paid on purchases is reported to the ATO on a Business Activity Statement (BAS) on either a monthly or quarterly basis.

Typical taxable supplies of a Parish would include:

Monies received in return for goods and services egg for use of premises,
Bookshop sales
Rent from non-residential premises
Sale of property or equipment, except for the sale of rectories used as residences (other than those properties being sold as residential property for the first time).
Grants received in order to carry out an agreed activity.

The above are only some examples and Parishes in doubt whether a particular transaction would attract GST should contact Diocesan Office.

Tax Invoices

In order to claim the GST input tax credits on purchases of goods and services, it is essential that the suppliers provide a tax invoice (except for purchases of not more than $50). A valid tax invoice for supplies of between $50 and $1,000 must contain the following seven features:

name of supplier
the words “tax invoice” stated prominently
the Australian Business Number (ABN) of the supplier
the date of issue of the tax invoice
a brief description of each item/service supplied
the GST inclusive price
where GST payable is exactly 1/11^th if the total price, either a statement along the lines of “total price includes GST,” or the GST amount.

For taxable supplies in excess of $1,000 the tax invoice must include the following three additional features:

the name of the recipient (i.e. the Parish)
the address or the ABN of the recipient
the quantity of the goods or the extent of services supplied.

GST-free supplies

If a supply you make is GST-free, then

you do not charge GST, and
you can claim input tax credits for GST included in the price you paid for the things you acquired to make the supply.

GST-free supplies include basic food, exports, sewerage, water, drainage, most education, childcare, and health services.

Activities of churches that are GST-free include:

religious services such as baptisms, weddings and funerals
charitable activities provided for no cost
non-commercial supplies, that is those sold for less than 50 percent of the GST-inclusive market value of the item or less than 75 per cent of the cost of the supply
supplies of accommodation provided for less than 75 per cent of the market value of the accommodation or less than 75 per cent of the cost of providing the accommodation.
sale of donated second-hand goods, for example by Opportunity Shops.

Input-taxed supplies

Input-taxed supplies include most financial supplies, most supplies of residential rent and residential premises and irregular fund-raising activities. If supplies, you make are input taxed then:

you do not charge GST on the supply, and
you are not entitled to input tax credits for anything acquired to make the supply.

If the Parish owns a house which it leases to someone else, the Parish will not have to pay GST on the rent received, however, the Parish will not be able to claim an input tax credit for the GST on any goods and services purchased for the purpose of making the supply. Therefore, the Parish will not be able to claim a credit for GST charged by an estate agent or his management fees or charged when maintenance work is carried out on the residence.

Similarly, Parishes may avail themselves of the concession which allows supplies in connection with irregular fund-raising events to be input taxed. Such events include fetes, balls, gala shows, dinners, performances or similar events, provided that such events do not form part of a series or regular run of events. The decision by the Parish to avail themselves of the concession should be recorded with justification in the Parish Council minutes. An example of such a minute is available from Diocesan Office.

GST Religious Groups

The following rules apply to members of the National Anglican GST Religious Group:

members of the group report individually to the ATO i.e. lodge business activity statements individually;
no GST on transactions between group members;
group members have reporting periods of their choice (depending upon turnover);
liability to GST rests with individual members of the group; and
all group members must be registered for GST and hold an Endorsement as an Income Tax Exempt Charitable Entity (ITEC).

It is important to note that the provisions relating to GST Groups are more flexible than the standard group provisions.

In practice this means that any transactions between members of the GST Religious Group will not be subject to GST. For example, transactions between a Parish and the Diocese, between Parishes, and between Parishes and Anglican entities within the Diocese, who are members of the group are not subject to GST.

If you are unsure whether to charge GST on a transaction with another Anglican entity, please contact the Accounts team at Diocesan Office, who can confirm if the entity is part of the Anglican GST Religious Group.