What are NFP GST-free activities?
If your client is an endorsed charity, their supplies are GST-free if they provide them for nominal consideration. An endorsed charity must be registered with the Australian Charities and Not-for-Profits Commission, it must also be endorsed by us to access these GST charity concessions.
Consideration means all payments, both monetary and non-monetary, made for the supply, regardless of who makes the payments.
An endorsed charity will make a supply for nominal consideration where the consideration received satisfies any of the following tests:
- less than 75% of the GST-inclusive market value for supplies of accommodation
- less than 50% of the GST-inclusive market value for supplies other than accommodation.
This information enables you to compare the consideration received for a supply against benchmark market values to determine whether your organisation's supplies are made for nominal consideration.
An endorsed charity can also use the cost of supply test which is where the supply is less than 75% of the cost to the endorsed charity for supplying something.
Benchmark market values versus actual market values
Benchmark market values are amounts that the ATO consider are reasonable GST-inclusive market values for accommodation, board and quarters and meals. The ATO publish updated benchmark market values each year. If you have actual market values through a valuation you need to use them to assess whether your goods or services are provided for nominal consideration. If the market valuation is less than four years old, you cannot use the benchmark market values unless the transitional arrangements for market valuations apply.
Eligible organisations and supplies
You may be able to use benchmark market values if you are an endorsed charity and you supply one of the following types of supplies:
- supported accommodation and community housing (long-term accommodation rates)
- crisis care (short-term and long-term accommodation as appropriate)
- accommodation in a retirement village that doesn't meet the definition of 'retirement village' in section 195-1 of the GST Act (long-term accommodation)
- residential housing (long-term accommodation)
- meals on wheels, charity soup kitchens meals or meals to the frail, homeless or needy (meals).
If you are eligible to use the benchmark market values but choose not to, you must use the market value guidelines or get a market valuation.
How to use the benchmark market values
The benchmark market value for each supply type is the GST-inclusive market value.
You cannot average the benchmark market value when your organisation provides different service types or provides services across a range of locations, for example:
- you cannot use short-term accommodation benchmark market values for a capital city and other country centres to arrive at an average value for all short-term accommodation
- you cannot use long-term accommodation benchmark market values for a one bedroom unit, a two bedroom unit and a three bedroom unit in the same building to arrive at an average value for all accommodation in that building.