Issue
Is the entity, a golf club, 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 non-compulsory prize fees from golf club members?
Decision
Yes, the entity is making a taxable supply under section 9-5 of the GST Act when it receives non-compulsory prize fees from golf club members.
Facts
The entity organises a weekend golf competition for golf club members.
To be eligible to receive a prize on finishing in the run down, entrants must pay a prize fee. The prize fees are used to purchase vouchers or golf balls to be given to the winning players as prizes. The vouchers can only be redeemed at the club for alcohol, meals (at the dining room) or goods (at the golf shop). This concept is referred to as an 'in-house promotion'.
It is not compulsory for players to pay the prize fee. Players who do not pay the prize fee will not receive a prize if they finish in the run down.
The entity is registered for goods and services tax (GST). The 'transaction' meets the other requirements in section 9-5 of the GST Act.
Reasons for Decision
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)(e) of the GST Act states that a supply includes a creation, grant, transfer, assignment or surrender of any right.
In this case, the golf club is granting its members the right to be eligible to receive a prize if they finish in the competition run down. Accordingly, the entity is making the supply of a right.
Therefore, as 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; and is neither GST-free under Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act; the entity is making a taxable supply under section 9-5 of the GST Act.