Manual of Policies and Procedures

G/7.1 Goods and Services Tax (GST)

Contact Officer

Executive Director, Finance Resource Management

Approval Date

19/06/2008

Approval Authority

Chief Financial Officer

Date of Next Review

01/06/2011

7.1.1 GST operations
7.1.2 Australian Business Number (ABN)
7.1.3 GST and donations
7.1.4 Risks
7.1.5 Contracts
7.1.6 Grants and appropriations
7.1.7 GST and courses
7.1.8 Recipient Created Tax Invoices
Related Documents
Modification History

The following information on the operation of the Goods and Services Tax (GST) is provided as general information only. The legislation is complicated and wide-ranging, and subject to considerable change. Advice regarding the effects of GST should be sought from Finance Resource Management before entering any new business undertaking.

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7.1.1 GST operations

GST is a transaction driven tax and applies when an entity engages in the provision of a taxable supply.

Taxable supplies

A taxable supply has GST included in its price. You make a taxable supply if you are registered or required to be registered for GST and:

  • money or consideration was given for the supply
  • the supply was made in the course of an enterprise
  • the supply is connected with Australia .

GST is not included for any part of the supply that is GST-free or input taxed (see below).

Types of transactions

GST supplies fall into three categories:

  • GST taxable at 10%
  • GST free (this means that no GST is payable on the supply and the University is entitled to an input tax credit for creditable acquisitions obtained to make that supply)
  • Input taxed (this means that no GST is payable on the supply and the University is not entitled to an input tax credit for creditable acquisitions obtained to make that supply).

Transactions within the University, which include the University Bookshop, are outside the scope of the GST.

The Cooperative Research Centres with lead sites based at QUT are not part of the University for GST purposes.

When a supply occurs

A supply occurs when goods are made available or when services are performed.

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7.1.2 Australian Business Number (ABN)

QUT's Australian Business Number (ABN) is 83 791 724 622.

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7.1.3 GST and donations

QUT is registered for GST and has been confirmed as an income tax exempt charitable institution which can receive tax deductible gifts. Being a public university, QUT is endorsed as a deductible gift recipient under Subdivision 30-BA of the Income Tax Assessment Act 1997 .

A gift of cash or in kind made to QUT is GST free provided that it has the characteristics of a gift as determined by the Australian Taxation Office. These are as follows:

  • it is given voluntarily by the donor
  • there is no " material benefit " to the donor provided in return
  • the gift arises from benefaction and proceeds from the detached and disinterested generosity of the donor.

Care needs to be exercised and advice sought where QUT provides a " supply " of any kind in return for a donation ( " supply " for GST purposes is defined in G/7.1.1 above ). An accounting report to a donor will not constitute material benefit but a report on the findings of work carried out using a cash donation may represent material benefit to the donor rendering the transaction subject to GST. The receipt of monies as a gift requires detailed consideration of the legislative requirements.

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7.1.4 Risks

The administration of GST requires the management of a number of risks since GST decisions and treatments are required on all transactions that QUT undertakes with its customers and suppliers, as well as most (if not all) transactions processed. Heads of responsibility centres must ensure processes are put in place to minimise these risks.

Risks for QUT include:

  • Not collecting GST from customers when taxable supplies are made. The legislation provides that one eleventh of the sale price comprises the tax and must be remitted to the Australian Taxation Office. The risk here is that revenue is reduced.
  • Charging GST incorrectly when GST free supplies are made. This is illegal.
  • Overcharging suppliers. Businesses must be diligent in passing through cost savings that flow from the new tax system to their customers.
  • Not being able to claim GST paid on the purchase of goods and services back from the Australian Tax Office. A " tax invoice " which has specific requirements must be on hand before this claim is made. The risk is that legitimate refunds cannot be received. When GST input credits cannot be reclaimed, the costs will be charged back to the responsibility centre. Staff are encouraged to obtain compliant documentation, including when travelling in Australia , to ensure that this does not occur.

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7.1.5 Contracts

All contracts entered into for the supply of goods or services, including research and consulting by the University, must include a provision for the client to pay GST. In-kind contributions made by sponsors of research and consulting form part of the consideration for performance of services and are also subject to GST.

Contract negotiation

It is expected that where QUT is supplying goods or services to Australian resident organisations with GST registration, it shall always be possible to facilitate the collection of GST by QUT, in addition to the agreed fee for service or contract price. QUT is in a position of being able to render tax invoices which will enable or assist the payer in claiming or verifying any input tax credit, set off, rebate or refund in relation to the GST payable.

Staff responsible for negotiating contracts should be aware that QUT as a supplier remains liable to remit the GST, at 10% of the value of such supplies, to the Australian Taxation Office. Therefore an agreement for QUT to absorb the GST payable on any arrangements will only mean that the funds available to the relevant activity are reduced by one eleventh.

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7.1.6 Grants and appropriations

Appropriations, as distinct from grants and contract fees, are not subject to GST. Payments from the Department of Education, Science and Training under the Higher Education Support Act 2003 are appropriations of government funds and are outside the operations of the GST. Unless otherwise confirmed in writing by the granting body, grants are not appropriations but are consideration for supplies under the GST. This means that one eleventh of the consideration received consists of GST and must be forwarded to the Australian Tax Office. Responsibility centres must ensure that granting bodies are increasing the amount granted to cover the GST so that net grants are not reduced.

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7.1.7 GST and courses

The definition of GST-free education is narrowly defined in the legislation and does not cover the entire range of the University's operations.

GST-free courses

The supply of an 'education course' is GST-free. The term 'education course' is defined in the Higher Education Support Act to include (amongst other things) a tertiary course, or a Masters or Doctoral course, or a tertiary residential college course.

A tertiary course means a course of study or instruction that is a tertiary course determined by the Education Minister under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act; or any other course of study or instruction that the Education Minister has determined is a tertiary course for the purposes of the Act.

Foundation, ELICOS and bridging courses are also GST-free. Courses such as faculty certificates are GST-free if they are made up of subjects that form part of a GST-free course, for example a bachelor's degree in the same discipline. Students enrolling for one subject from a GST-free course will be deemed to be receiving a GST-free supply.

Taxable supplies of education

Continuing Professional Education courses targeted at specific occupations, for example health professionals, are GST taxable. Adult and community education is only GST free where it provides or adds to the employment skills of those undertaking the course and is targeted at the general community. Courses with a leisure component, such as Study and Travel, are GST taxable.

Mixed supplies

Where GST- free and GST taxable services are supplied together, the components need to be separately identified and applicable GST stated clearly.

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7.1.8 Recipient Created Tax Invoices

From time to time, staff members and responsibility centres may be approached by external organisations for which QUT performs a service, to obtain QUT's consent for the external party to raise a Recipient Created Tax Invoice. This document is effectively an invoice which acknowledges the supply being made by QUT and acts as a notice to the other party to remit the agreed fee for service.

This is not a process which QUT wishes to adopt. Except in circumstances where QUT is not aware of the amounts to be invoiced (for example, the trade in of a motor vehicle), and/or funds are for distribution across a number of projects (for example, ARC Grant income), QUT's approval should be withheld. Should scenarios of this type occur, then the responsibility centre administering the funds concerned may agree to the issue of a Recipient Created Tax Invoice by the other party provided that the responsibility centre concerned accepts full responsibility for ensuring that the external party is able to issue Recipient Created Tax Invoices and securing the necessary documentation. Financial Services should be provided with a copy of the Recipient Created Tax Invoice. In all other instances approval for the raising of a Recipient Created Tax Invoice should be denied.

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Related Documents

MOPP G/8.1 User Charging Policy

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Modification History

Date

Sections

Source

Details

19.06.08

All

Acting Executive Director, Finance and Resource Planning

Policy reviewed – minor editorial change only

14.03.07

G/7.1.1

Director, Financial Services

Updated to remove reference to Student Guild fees

06.09.05

All

Executive Director, Finance and Resource Planning

Updated consistent with current legislation and renumbered to G/7.1 (formerly G/12.1)

20.12.04

G/7.1.6

Registrar's Office

Editorial amendment (consistent with Higher Education Support Act 2003 and related Guidelines)

14.08.01

All

Director, Accounting Services

New section providing operational information on the GST

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