Written by the ATO
Specific Questions and Answers
Generally, membership fees are payments in return for services or rights and will be subject to GST. Membership bestows rights to members even where nothing tangible is supplied.
Gifts are considered under Taxation Ruling IT 2443 which states:
" that a payment made for consideration, however inadequate, falls outside the concept of a gift for the purposes of paragraph 78 (1) (a)". The example given in the ruling was a "100 pound a plate dinner" where the cost of the dinner was paid out of the proceeds of the subscriptions. It was considered that the dinner represented consideration received by the payer, even though inadequate, and the subscriptions were not allowed as a deductible gift.
Given the view above regarding gifts, memberships would not be treated as gifts.
The commercial activities of charities will be taxable but the non-commercial supplies by charities will be GST-free. Anything supplied by a charity (if registered for GST) is GST-free if the consideration is less than 50% of the GST inclusive market value or less than 75% of the "cost of supply. It is open for a charity to demonstrate that the membership fee is less than 50% of the GST inclusive market value or 75% of the cost of the membership rights.
The supply of new goods at these activities is generally taxable. Where the supply is by a charity and is for consideration less than 50% of the GST inclusive market value or 75% of the "cost of supply" it will be GST-free. Where the supplies are taxable or GST-free the charity is entitled to full input tax credits for all their acquisitions that relate to these supplies.
Generally the supply of donated new goods at a fundraising activity (where the organisation is registered for GST) would be taxable. A supply of donated second hand goods is generally GST-free provided there is no change in the original character of the goods (eg. material made into stuffed dolls and sold would not be GST-free). Cakes that are sold at fetes for greater than 50% of the GST inclusive market value would be subject to GST even though the materials for those cakes were donated.
Where the supply is by a charity and is for consideration less than 50% of the GST inclusive market value or 75% of the 'cost of supply' it will be GST-free. Where the supplies are taxable or GST-free the charity is entitled to full input tax credits for all their acquisitions that relate to these supplies.
The price charged for a fundraising dinner is consideration for a taxable supply where the organisation running the event is registered. The person attending is receiving material benefit and therefore no part of the price paid can be considered a gift.
The donation component of a fundraising dinner would not be considered to be a gift.
The supply of donated new goods at fundraising events will be subject to GST.
Generally, where the item received by the person is of insubstantial value and in the nature of a receipt and the intention of the person was to donate money rather than purchase an item the activity would be considered to be a donation.