Supplies of tickets by
organisations in the cultural and performing arts sector
- Non-profit organisations in the
cultural and performing arts sector are often charitable or gift deductible
entities. As a result they are able to apply the provisions in the GST Act
that specifically relate to charities.
- A gift deductible entity for the
purposes of the GST legislation is an entity that is either gift deductible in
its own right or an entity that maintains a fund that is a gift deductible
recipient where that fund is not an entity in its own right.
- There has been some concern in
the cultural and performing arts sector about the application of subparagraph
38-250(2)(b)(ii) of A New Tax System (Goods and Services Tax) Act 1999 to
supplies of tickets for performances and events.
- Subparagraph 38-250(2)(b)(ii)
provides that supplies by a charitable institution, a trustee of a charitable
fund, a gift deductible entity or a government school will be GST free if the
consideration received for the supply is less than 75% of the cost to the
supplier of acquiring the thing supplied.
- The following is a brief summary
of the position the ATO has adopted concerning the interpretation of
subparagraph 38-250(2)(b)(ii). The ATO position is one that is within the
scope of the GST legislation whilst simplifying the administrative and
compliance requirements for the sector.
Summary of GST Treatment of
supplies by organisations in the cultural and performing arts sector under
subparagraph 38-250(2)(b)(ii) of the GST Act.
- The ATO has approved the
following methodology for applying subparagraph 38-250(2)(b)(ii) for
organisations in the cultural and performing arts sector that cannot establish
their actual costs at the time of supply. This method is set out below.
- To correctly calculate whether a
supply is GST-free or taxable an organisation must
projected costs for a season of performances, exhibition or event and divide
that estimate by the total number of tickets (all classes) that they
estimate they will sell. This calculation provides the cost of providing a
Note: It is accepted that when
applying subparagraph 38-250(2)(b)(ii) an organisation can include all
direct costs and a reasonable apportionment of indirect costs. Costs used
must be real costs however. Things like voluntary labour and donations,
depreciation and imputed costs can not be included. All projections must be
realistic and must be aligned with other costing conducted when an
organisation determines ticket prices and the costs of providing an event or
For each class
of tickets the organisation should divide the price that is charged for a
ticket in that class by the estimated cost per ticket. If the price charged
for that ticket is less than 75% of the cost of the ticket (worked out in
step 1) the supply will be GST free. If the price charged is 75% or more
than the cost of providing the ticket, the supply will be subject to GST.
All tickets in a class of tickets will be treated in the same
Season tickets should be treated as a bundle of rights to
attend performances. The cost of a season ticket would be worked out as the
sum of the costs of the individual performances covered by the ticket. That
cost is then compared to the price of the season ticket in establishing
whether or not the season ticket is GST free. A similar approach should be
taken where a bulk discount is given for purchasing a certain number of
tickets at the same time.
The organisation should
calculate the amount of GST they need to remit in each Business Activity
Statement based on this methodology.
An example of this methodology is
set out in Attachment A
- The problem of applying
38-250(2)(b)(ii) is unique to the cultural and performing arts sector where
the actual cost of providing a ticket to a performance, exhibition or show
might not be known until well after the event, and tickets are often sold well
in advance. To ensure that such organisations are able to apply subparagraph
38-250(2)(b)(ii) with certainty and without the undesirable outcome of having
to apply the cost of supply rules twice, once to projected figures to
establish whether supplies are taxable and once to actual figures (after the
event) to establish whether they calculated their GST liability accurately in
the first place, Division 123 will be applied.
- The Commissioner will make a
determination under Division 123 to allow charitable organisations in the
cultural and performing arts sector that are applying subparagraph
38-250(2)(b)(ii) to use their projected costs to establish the GST treatment
of supplies when the actual costs will not be known until after the supplies
have taken place. Where actual costs are available those figures should be
used. If organisations calculate their GST liability on this basis, the amount
of GST calculated on supplies affected by subparagraph 38-250(2)(b)(ii) will
be the GST liability for those supplies in any given tax period.
- If you are unsure about the
application of subparagraph 38-250(2)(b)(ii) to supplies made by your
organisation you should contact the GST Charity and Non-Profit Team in the
Australian Taxation Office by:
- Writing to GPO Box
9935 in your capital city, attention Non-profit team; or
- E-mailing your question to GSTmail@ato.gov.au, attention
Worked Example of calculating
GST treatment of tickets under subparagraph 38-250(2)(b)(ii).
Organisation A estimates that a
season of performances will cost them $4,200,000 to produce
They have 4 Classes of
Students pay $25 per ticket
tickets are sold for $45 per ticket
tickets are sold for $100 per ticket
|Box seats are
sold for $175 per ticket
Organisation A receives several
government grants to help fund their activities. These grants are consideration
for an agreement to supply services, and do not reduce the calculation of the
cost of the performance
They estimate that they will sell
approximately 65,000 of the available tickets
Their estimated costs are
$4,200,000 divided by 65,000 = $64.62
The cost per ticket is
75% of the cost of supply is
Any tickets sold for less than
$48.47 will be GST free.
Looking at the different classes of
$25 tickets will be GST free -
25/64.62 = 38%
$45 tickets will be GST free - 45/64.62 = 69%
The other tickets will be taxable
because the consideration received per ticket is greater than the cost per