Written by the ATO
Principle
The purpose of this document is to
provide a basis or benchmark of the market value of a range of supplies for the
types of Charities listed to use as a reference point. It will also
provide certainty as to the ATO's view of suitable market values for these
supplies.
These guidelines will enable
organisations to make a comparison of the benchmark market value and the
consideration they receive for the supply provided to determine whether the
supplies they make are taxable, GST-free or input taxed. Specifically, Charities
will be able to easily determine whether a supply is for consideration less than
50% or 75% (whichever is applicable) of the GST inclusive market
value.
These guidelines will be updated
from time to time and where necessary further market value benchmarks will be
included.
What
organisations may use these guidelinesThe use of the benchmarks (accommodation and
meals) as an alternative to the general rules provided in the 'Market Value
Guidelines' document is limited to the following types of organisations
(and supplies) by those organisations;
- supported accommodation and
community housing (long term accommodation rates)
- crisis care (short term and long
term accommodation as appropriate)
- retirement villages (long term
accommodation)
- residential housing provided for
the clergy (long term accommodation)
- 'Meals on Wheels', charity 'soup
kitchens' and organisations that prepare and supply meals to the frail,
homeless or needy (food guidelines)
The accommodation benchmarks are
not for use by organisations where there is a market value that can be
established using the first two test above, that is actual market value for a
supply or a market value of a similar supply. That is the benchmarks do not
apply to the following types of organisations or supplies;
- campsite accommodation
- university halls and colleges·
university halls and colleges
- boarding schools
- non-residential buildings like
halls and offices
ATO
Position
The GST law provides that the
commercial activities of charities will be taxable but the non-commercial
supplies provided by charities will be GST-free. Thus, supplies for nominal
consideration made by a charity are GST-free. Nominal consideration means less
than 50% of the GST inclusive market value for supplies other than accommodation
and less than 75% for supply of supported accommodation and community
housing.
Where a Charity uses the benchmark
market values provided in these guidelines as the basis to determine whether the
supplies they are making are taxable, input taxed or GST-free because of the
application of s38-250(1) that market value will be accepted by the
ATO.
Where these benchmark market values
do not satisfy or are not suitable to the needs of an organisation of the type
listed above, that organisation may undertake their own market valuation to meet
their individual situation. In these circumstances organisation should retain
appropriate documentation to support alternative market values.
Application of the Benchmark Market Values
This document provides benchmark
market values for the following types of supplies;
- short term accommodation
- meals
- board and quarters
- long term accommodation
- employment services
Also, there are examples provided
to demonstrate the application of the benchmark values.
- Short term accommodation.
For short term accommodation
the Australian Public Service travel allowance rates are accepted as the
benchmark market value against which to apply the market value test to
determine whether a supply by a Charity is commercial or
non-commercial.
The rates provided in column 2
of Attachment B of DEWRSB ADVICE NO 1999/7 for Non Senior Executive Service
are the appropriate market value for short term accommodation per night for
the locations listed. Where a location is not specifically listed the 'Other
Country Centre' rate or an appropriate individual valuation should be used.
[see attachment 1]
Short term crisis and emergency
accommodation is for periods up to twenty-eight days.
- Meals
Similarly benchmark market
values for meals are provided in Attachment B of DEWRSB ADVICE NO 1999/7 in
columns 3, 4 and 5. The meal rates also vary by location. [see attachment
1]
Please note, where an
organisation purchases food and then provides it to someone else then the
market value is the cost of the food.
- Short term board and quarters
Where short term full board is
supplied the benchmark market value would be the appropriate short term
accommodation expense (column 2) plus the meal and incidental rates (columns
3 - 6) per day from DEWRSB ADVICE NO 1999/7 Attachment B. [see attachment
1]
For example, these rates may be
used as the value for emergency or crisis accommodation where the supply is
a combination of accommodation and meals.
Please note, where an
organisation purchases food and then provides it to someone else then the
market value is the cost of the food.
- Long term accommodation
The temporary accommodation
rent ceilings in DEWRSB ADVICE NO 1998/42 are an acceptable basis for
determining the market value for the supply of long term residential
accommodation. [see attachment 2]
For supplies of supported
accommodation and community housing nominal consideration is less than 75%
of the GST inclusive market value.
The rent ceilings provided do
not allow for;
- Differing standards of
accommodation
- Other locations and regional
areas
- Seasonality of market
rates
- The ability of APS departments
to use other rates when it is not reasonable to apply the ceiling
rates.
To recognise these issues and
to allow administrative simplicity in the use of these guidelines the
rent ceilings provided at attachment 2A may be increased by 25% to determine
the benchmark market rate.
The capital city rate provided
may be used as the appropriate rate across all regions for the relevant
state.
This additional flexibility is
only available with respect to long term
accommodation.
- Long term board and quarters
When full board is provided in
long term accommodation the market value would be the composite rate of the
one bedroom rate applicable to the location (column 5 of attachment 2A) plus
the applicable meal rate (attachment 1C).
- Employment services
The service fees applicable to
Australian Public Service (APS) and public sector recruitment can be used as
a benchmark market value for the provision of employment services. [see
attachment 3]
Note: DEWSRB are currently
developing wide ranging benchmark rates for employment services. When these
rates become available they will become the benchmark market rates for the
purpose of these guidelines.
Examples
of the application of the values provided
The following examples are provided
to demonstrate the application of the benchmark market values. The client
contribution or consideration for the supplies made may not be realistic in some
of the cases but they are provided for demonstration purposes only.
Short term accommodation -
supported accommodation
Parramatta Community Care
provides emergency housing in their Parramatta Hostel. In addition to the
accommodation they provide breakfast and dinner. Their clients make a
contribution of $78 per day. Using these guidelines the market value for this
supply is as follows;
Sydney accommodation
rate |
$119.00 |
Breakfast & dinner
($14.55 + $27.90) |
42.45 |
Market value/day |
$161.45 |
IIn this example the
supplies (food and accommodation) by Parramatta Community Care would be
GST-free because the consideration for the supply of the accommodation
component ($57.49) is less than 75% of the market value and for the supply of
the meals component ($20.51) is less than 50% of the market
value.
Similar supplies (food and
accommodation) by the same organisation for the same contribution of $78 in
their Hostel located in Dubbo, NSW (an "other" country centre
rate).
Dubbo accommodation rate
|
$ 54.00 |
Breakfast & dinner
($12.95 + $25.60) |
38.55 |
Market value/day |
$
92.55 |
In this case the supplies (food
and accommodation) by Parramatta Community Care would be taxable supplies
because the consideration for the supply of the accommodation component ($45.51)
is greater than 75% of the market value and for the supply of the meals
component ($32.49) is greater than 50% of the market value.
Long term community housing
accommodation
The WA Community
Housing Group provides a two bedroom flat in Cannington to a single parent and 2
children. The client makes a contribution of 25% of their income, which is
$73.54 per week. Using these guidelines the market value for this supply
is;
Market value
|
$150.00/week |
In this example the
supply by WA Community Housing Group would be GST-free because the
consideration for the supply is less than 75% of the market value.
The Queensland Community Housing
group provide a one bedroom apartment to a single pensioner on Centrelink
payments plus a small other income. The client makes a contribution of 25% of
their income of $96.32. Using these guidelines for the market value the market
value for this supply is as follows;
Market value
|
$120.00/week |
This supply would be input
taxed because the consideration is 80% of the market value.
Using the same example
and increasing the ceiling rent by 25% the market value for this supply is as
follows;;
Brisbane
rental ceiling (one bedroom) |
$120.00 |
Market value
|
$120 + .25 of
$120 = $150/week. |
Using the flexibility
of increasing the ceiling rent by 25% now makes the supply by the
Queensland Community Housing Group GST free because the consideration for the
supply is less than 75% of the benchmark market value. Where:
And the payment of $96.32
represents 64% of the market value.
Meals
A charity in Katherine
NT, provides home cooked midday meals to aged persons at the Community Centre.
The clients make a contribution of $7.50 per meal. Using these guidelines the
market value for this supply is as follows;
Country centre
meal rate (lunch) |
$
14.85 |
Market value
|
$
14.85 |
|
|
GST inclusive
market value |
$
16.34 |
In this example the supply of the
midday meal would be GST-free because the consideration for the supply is less
than 50% of the GST inclusive market value
Specific
issues
- These guidelines provide a
benchmark market value for the supplies and locations specified.
- These guidelines will be updated
from time to time and where necessary further market value benchmarks will be
included. Until such time as these guidelines are updated the travelling
allowance and meal rates included in Attachment 1 can be increased by 10% to
allow for the GST.
- These guidelines can be relied
upon as appropriate market values for use in considering the market value test
in s38-250(1)
- Where an organisation provides
services across a range of locations covered specifically by these guidelines
it is not acceptable to average the market value. For example it is not
acceptable to average short term accommodation market values for Sydney ($119)
and NSW other country centres ($54).
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