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27 Sep 07 GST: Charitable institutions and Taxpayer Alert TA 2007/1 - GSTD 2007/D3

This draft GST Determination was released on 26 September 2007 for public comment by 26 October 2007. Its full title is "Goods and services tax: what are the results for GST purposes of a charitable institution engaging with an associated endorsed charitable institution in an arrangement described in Taxpayer Alert TA 2007/1?"

Taxpayer Alert TA 2007/1 (Alert) issued on 6 March 2007. It describes an arrangement designed to gain entitlement to input tax credits by treating otherwise input taxed supplies of residential accommodation as GST-free. These arrangements involve charitable institutions leasing land and buildings to associated endorsed charitable institutions in an attempt to increase the cost of making supplies of accommodation to residents and thereby satisfying the concession in s 38-250. The Alert indicates that the Commissioner was examining these arrangements.

The draft GST Determination states, in answer to the question posed in the title:

"The arrangement described in Taxpayer Alert TA 2007/1 may not result in supplies of accommodation being treated as GST-free because:

(a) the consideration for the supply of accommodation to the residents is not less than 75% of the cost to the supplier of providing the accommodation; or
(b) the general anti-avoidance provisions in Division 165 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)1 may apply to the arrangement."

For a copy of GSTD 2007/D3, go here

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