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Help Sheet

Benchmark Market Values for Charities

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 guidelines

The 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.

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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).

  6. 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:

Market value $150/week


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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