This GST Determination, released on Wed 2.10.2013, states that the consideration the supplier provides for acquiring assets that diminish in value over time can be taken into account in determining whether a supply in that period is GST-free under s 38-250(2)(b)(ii) of the GST Act, to the extent the consideration provided reasonably relates to that supply.
The Determination outlines 3 examples of applying a reasonable methodology that reflects the proportion of consideration. It was previously issued as Draft GST Determination GSTD 2013/D3 and is essentially the same save for the addition of an extra example illustrating circumstances where it would be reasonable to allocate the full capital costs in the period or the year in which the costs were incurred.
DATE OF EFFECT: Applies both before and after its date of issue.
[LTN 191, 2/10/13]
Section 38-250 – A New Tax System (Goods and Services Tax) Act 1999
NOMINAL CONSIDERATION ETC.
(a) the supplier is an * endorsed charity, a * gift-deductible entity or a * government school; and
(b) the supply is for * consideration that:
(i) if the supply is a supply of accommodation–is less than 75% of the * GST inclusive market value of the supply; or
(ii) if the supply is not a supply of accommodation–is less than 50% of the GST inclusive market value of the supply.
(a) the supplier is an * endorsed charity, a * gift-deductible entity or a * government school; and
(b) the supply is for * consideration that:
(i) if the supply is a supply of accommodation–is less than 75% of the cost to the supplier of providing the accommodation; or
(ii) if the supply is not a supply of accommodation–is less than 75% of the consideration the supplier provided, or was liable to provide, for acquiring the thing supplied.
(4) Subsections (1) and (2) do not apply to a supply by a * gift-deductible entity endorsed as a deductible gift recipient (within the meaning of the * ITAA 1997) under section 30-120 of the ITAA 1997, unless:
(a) the supplier is:
(i) an * endorsed charity; or
(ii) a * government school; or
(iii) a fund, authority or institution of a kind referred to in paragraph 30-125(1)(b) of the ITAA 1997; or
(b) each purpose to which the supply relates is a * gift-deductible purpose of the supplier.
Note: This subsection denies GST-free status under this section to supplies by certain (but not all) gift-deductible entities that are only endorsed for the operation of a fund, authority or institution. However, supplies can be GST-free under this section if they relate to the principal purpose of the fund, authority or institution.