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Is the entity, a prizewinning participant in a competition, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when it receives a monetary prize?

Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it receives a monetary prize.

The entity is carrying on an enterprise in Australia and is registered for goods and services tax (GST).

The entity pays an entry fee to the show organiser for the right to participate in a competition held in Australia. The participation may take many forms including the exhibition of animals and produce.

The entity wins a monetary prize as a result of participating in the competition.

Section 9-5 of the GST Act sets out the requirements that must be met for an entity to make a taxable supply. The requirement that the supply must be for consideration is of particular relevance. 'Supply' is defined in section 9-10 of the GST Act to include a supply of services. The exhibition of the animal or produce is a supply of a service by the entity. 'Consideration' is defined in paragraph 9-15(1)(a) of the GST Act to include a payment or any act or forbearance in connection with a supply of anything. The payment of prize money is consideration for the supply of the entity's services.

Therefore, the exhibition of the animal or produce is a supply of a service for which the consideration is the payment of the prize money.

The entity is registered for GST and the supply meets all the requirements of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act.