GST and Member contributions

Is the entity, a professional association, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), to its members, where those members provide membership fees?

Yes, the entity is making a taxable supply under section 9-5 of the GST Act to its members, where those members provide membership fees.

The entity is a professional association that acts as a peak body for its members. Its members are regional professional bodies from various States and Territories. The regional bodies provide funding, in the form of membership fees, to the entity.

In return for the membership fees, the entity carries out functions that would otherwise have been carried out by its members. It maintains a national register of professionals. It provides an administrative machinery which ensures that there is a national standard for that profession, setting consistent standards in training and qualifications.

The membership and registration fees paid by individual members to the regional bodies are not subject to GST under Division 81 of the GST Act.

The entity is registered for goods and services tax (GST). The 'transaction' meets the other positive limbs of section 9-5 of the GST Act.

Section 9-5 of the GST Act sets out the requirements that must be met for an entity to make a taxable supply. The existence of a supply itself is an essential element in determining whether a transaction is a taxable supply under section 9-5 of the GST Act.

Section 9-10 of the GST Act discusses the meaning of the word 'supply' for GST purposes. Paragraph 9-10(2)(b) of the GST Act states that 'supply' includes a supply of services. The transactions the entity undertakes include acting as a peak body for its members; carrying out functions that would otherwise have been carried out by the regional bodies; maintaining a national register of professionals; providing an administrative machinery which ensures that there is a national standard for that profession, setting consistent standards in training and qualifications. It is clear that these transactions are a supply of services that the entity is providing to its members in return for membership fees.

In this case, the membership and registration fees paid by individual members to the regional bodies are not subject to GST under Division 81 of the GST Act. However, Division 81 does not exclude GST from applying to payments from the regional bodies to the entity.

The entity is registered for GST and the transaction is a 'supply' that fulfils all of 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.