Financial Services

Grants and appropriations

Supplies made in connection with the receipt of a grant will be subject to GST where the grant represents consideration for a supply.

Grants

Only grants that are completely unconditional will be GST-free. If there is no obligation tied to the grant, and no other supply is to be provided by the University in return for the grant, no GST will be payable. Grants that have no GST will be treated like donations or gifts.

If the supply for which the grant is consideration is not a taxable supply, there will be no GST payable. Also, if there is no supply for the grant, there will be no GST payable.

Regardless of how the agreed value of the grant is calculated, the GST will always be equal to 1/11th of that value. As the gross amount received is reduced by GST to arrive at the amount available to the University, GST must be factored into the grant application.

Different organisations that offer grants will account for GST in different ways. Many organisations will offer different suggestions and many government organisations may feel that the grant is an appropriation and no GST is applicable.

The important thing to remember is that the University is the supplier of the services and in most cases the University determines the value of those services; therefore it is the University's responsibility to ensure that GST is accounted for.

Research grants

Research grants received by the University are likely to be considered as taxable supplies and therefore will give rise to a GST liability.

Appropriations

Appropriations are a complex area for GST purposes and the University is still in negotiation with the ATO to confirm the GST treatment of specific appropriations. Accordingly, any concerns about the GST treatment of an appropriation should be referred to the University Tax Team. Generally, appropriations refer to the non-commercial activities of government and they are deemed as outside the scope of GST.

To be an appropriation:

  • there is a payment between government-related entities
  • the authority to make the payment is found in an Act (or other legislation)
  • either it is a specific transaction between government related entities, or it is not part of a commercial transaction.

It is necessary to fulfil these requirements otherwise the payment will not be defined as an appropriation.