Site Updated : 04/07/08
The
Goods and Services Tax
– and its impact on the Fund
Grants
from the CBF have been deemed by the Australian Taxation Office (ATO) as
consideration for taxable supplies. Therefore
if the recipient of the grant is registered for the GST, the grant
recipient has a liability to remit 1/11th of the funds received to
the Australian Tax Office (ATO). The
GST treatment of a grant does not depend on the final purpose to which the funds
granted are applied.
REGISTERED
FOR THE GST:
It is the Queensland Government’s policy to gross-up all grants to grant recipients that are registered for the GST to cover the GST liability. Therefore the CBF will gross up grants to those successful organisations that are registered for the GST. For example:
- An organisation requests $5,000 (this price being exclusive of the
GST) for a computer and advises the CBF that they are registered for
the GST.
- If this organisation’s application is successful the total grant
from the CBF will be for $5,500, $5,000 for the computer purchase and $500
GST, which the organisation must remit to the ATO.
- As the organisation is registered for the GST, when it purchases
the computer for $5,000 plus GST of $500, being a total of $5,500, it can
then claim the $500 as an input tax credit. It therefore has a GST payable amount of $500 and an
input tax credit of $500, so the final GST impact for the organisation is
zero.
For the CBF to be able to claim an input tax credit for the amount by which it grossed up the grant, grant recipients must provide the CBF with a Tax Invoice. If your organisation is successful in receiving a grant and does not have the systems in place to easily provide a valid tax invoice then a “Recipient Created Tax Invoice” will be sent to you together with the payment.
NOT
REGISTERED FOR THE GST:
For
organisations that are not registered for the GST, no GST liability arises from
the receiving of a grant.
AUSTRALIAN
BUSINESS NUMBER:
Where
a grant recipient does not have an ABN, then the CBF is required under the new
tax laws to withhold 48.5% of the grant. An
exception to this rule is when the organisation is income tax exempt.
If an organisation is income tax exempt then it must complete the ATO
form “Statement by a Supplier” and forward it to the CBF.
FURTHER
INFORMATION
Should
you require any additional information in regards to the impact of the GST on
grant recipients please contact the secretary of the CBF, Janet Davison, on 0412
514 780. Queensland Treasury has
published many papers on the subject that can be easily forwarded to you either
by mail or electronically.