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GST on Supplies of Gifts

Where an entity is registered for GST or required to be registered for GST and makes a taxable supply (e.g. transfers title to non-residential land) then that transfer is a taxable supply and GST is payable on one eleventh the value of the consideration paid.

If there is no consideration paid then there will be no GST payable, provided the transfer is made voluntarily but if the transferor does receive a benefit, then GST on the value of the land is payable, even though the “benefit” to the supplier may be significantly less valuable.

In many charitable organisations, especially where groups are consolidating entities, and moving assets, the benefit to the transferor may be delivered in the form of rights to use of other property owned by the transferee, or, release from ongoing liabilities under bank facilities, or trade creditor contracts. Then, in the absence of any special exemption, the transferor must remit one eleventh of the value of the benefit to ATO.  The supplier should look to recover the GST from the recipient.  If the recipient pays the GST, it could claim the GST back by way of input tax credits, provided the recipient is registered for GST.

An example of a special exemption, where there would be no GST, is if both the transferor and the transferee, for example, are members of the same GST Religious Group: but not all charitable groups have the benefit of such special exemptions.

If in doubt, we recommend the entity seek a private ruling on whether or not it is making a taxable supply, notwithstanding there is no “purchase price” for the supply

Dianne Retief, Lawyer

Josephine Heesh, Partner

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