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The Federal Treasurer Peter Costello has just announced an amendment to the GST Legislation affecting Charities and Not for Profit organisations.

Amendments to the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act)
Charities – more flexibility for fund-raising activities
“The GST Act will provide the Commissioner of Taxation the power to issue guidelines to specify fundraising events of charities which can be treated as input taxed.

“These fundraising events may include a fete, ball, gala show, dinner performance or similar event. The event must be separate from and not forming any part of a series, or regular run, of like, or similar events. It may also include an event that involves the sale of small fundraising items such as flowers, confectionery and chocolates (not alcoholic beverages or tobacco products), provided the charitable entity is not in the business of making such supplies. It will include events such as ‘Daffodil Day’, to make clear such activities are not to be subject to GST.

“Where the fundraising event does not meet this description, a charitable entity may make a request to the Commissioner to apply his discretion to treat an activity as input taxed. In applying his discretion, the Commissioner would need to have broad regard to whether the charitable entity is in the business of making such supplies. Establishing whether a particular activity or series of activities constitutes a business is a factual matter and the Commissioner will have power to decide on a case by case basis. In addition, the Commissioner must be satisfied that the fundraising is genuine and the proceeds are for the direct benefit of the charity.”