Issue
Is the entity, an agricultural show competition organiser, making a creditable acquisition under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when it pays prize money to the winner of a competition?
Decision
Yes, the entity is making a creditable acquisition under section 11-5 of the GST Act.
Facts
The entity is registered for goods and services tax (GST) and organises competitions in Australia for the exhibition of animals or produce. It receives an entry fee from each participant that enters the competition and provides a monetary prize to the winner of the competition.
The prizewinner makes a taxable supply under section 9-5 of the GST Act where it receives prize money for the exhibition of the animal or produce.
Reasons For Decision
The general requirements that must be met for an entity to make a creditable acquisition is set out in section 11-5 of the GST Act as follows:
You make a creditable acquisition if: (a) you acquire anything solely or partly for a creditable purpose; and (b) the supply of the thing to you is a taxable supply; and (c) you provide or are liable to provide consideration for the supply; and (d) you are registered, or required to be registered for GST.
The entity is acquiring a supply of services from the prizewinner in carrying on its enterprise. The supply by the prizewinner is a taxable supply for which the prizemoney is consideration provided by the entity.
Therefore, the entity is making a creditable acquisition as all of the requirements in section 11-5 of the GST Act are met. [NOTE: A monetary prize, as discussed above, is consideration for a service provided by the prizewinner as a consequence of being a participant in the competition. In itself, the supply of the monetary prize cannot be a supply by the show organiser as subsection 9-10(4) of the GST Act specifically states that a supply does not include a supply of money unless the money is provided as consideration for a supply that is a supply of money.]