Australia’s New Tax System is being introduced from 1 July 2000. The reforms associated with the New Tax System are significant and will impact on the way ASTF does business and on our relationship with suppliers, clients, business partners and contractors. 

Your organisation, being one of the major group of partners we are regularly conducting business with, will need to take note, if you are not already doing so, of the changes to the tax system.

ASTF has sought and received advice from our advisors and the Treasurer regarding the impact of GST on our organisation. We are of the view that the service we provide to DETYA and the coordination services we receive from yourself will be taxable supplies for GST purposes from 1 July 2000.

We have registered for an ABN as well as GST and will be able to claim Input Tax Credits of any GST that you may be required to charge us. Our ABN is 13 918 739 824.

As a result, there will be no foreseeable net increase to our cost structure regarding the introduction of GST. Your funding levels should therefore not be affected.

On top of giving you the good news, we feel that there is a need for us to make our general position clearer to you to avoid any later confusion. We also need information from you about your intention to register for an ABN and GST. This information will be used to update our records to ensure a smooth transition from 30 June 2000. Attached is the ABN Form for your completion and return as soon as possible.

Let’s have a look at the background information:

a) General position of ASTF
- We would prefer all grant recipients to be GST registered and to charge GST, the reasons being:
· Should a grant recipient not be GST registered, the organisation will not be entitled to claim input tax credits which would effectively reduce funding available for programmed activities
· Administratively for us, it would be simpler

- We cannot compel a grant recipient to be GST registered or to charge GST. 

- We recognise that many grant recipients will not be required to be registered for GST nor to charge GST. We will continue to make available grant funding to non-GST registered applicants and will not discriminate between GST registered and non-GST registered applicants.

Where a grant recipient charges GST, we are entitled to an input tax credit for the GST so charged. 

b) GST Registration for grant recipients 

GST registration is only mandatory for a non-profit body where the body’s annual turnover from making taxable or GST-free supplies is $100,000 or more. Where turnover is below $100,000, registration is optional. This turnover level is called a “Registration Threshold”.

- You may receive a variety of funding from a variety of sources. Hence the application of the registration threshold will vary from one organisation to another. You should seek professional advice before deciding whether to register or not. However, once registered, a grant recipient must charge GST on taxable supplies made on or after 1 July 2000.

- Since you may have been paid some funding with no GST included, you should consult your advisor as to whether you should be charging us GST in relation to the funding already received. ASTF will pay the additional 10% GST provided a
Tax Invoice (see below) is submitted.

- We recognise that certain grant recipients may view the supply being made to ASTF as GST-free (ie the supply of GST-free education services) or may not consider (or overlook) the possibility that a taxable supply is being made in respect of which a GST liability exists.

- Should you decide at a later stage to charge us GST, ASTF will pay the additional 10% GST provided a Tax Invoice (see below) is submitted.

- However, we would not permit a grant recipient to seek funds in relation to any penalties etc imposed by the Australian Taxation Office as a result of a grant recipient failing to identify/discharge a GST liability.

c) To charge or not to charge

A number of procedural requirements will arise when a grant recipient charges
GST.

- You will be required to issue a Tax Invoice as evidence of the GST charged. The Grant Recipient’s ABN will need to be quoted on all Tax Invoices. A copy of a suggested pro forma tax invoice is attached for your information.

- For Grant Recipients who decide not to register for ABN and GST, they will be required to provide written confirmation to ASTF that funding received from ASTF represents income that is income tax exempt. A pro forma confirmation will be developed for these purposes and will be made available once all responses are received.

- Failure to provide the confirmation will lead to 48.5% of funding being withheld and remitted to the Tax Office by ASTF.

d) Next Steps
While we can provide general advice on the new GST arrangements, we do not know of your particular circumstances or what payment arrangements best suit you. There are several sources where you could seek taxation advice. They are:

- ATO (fax 1300 139 031, email : replyin5@ato.gov.au) 
www.taxreform.gov.au

- Brigid Freeman , VETNETwork GST start up Project (with face to face workshops scheduled in many locations - refer to events calendar on VECO) Brigidfreeman@netspace.net.au

- Your professional adviser

Should you have any general enquiries or require assistance in completing the form, please do not hesitate to contact either myself, Julie Domazet or Kathryn Meggitt on (02) 9299 5899, fax us on (02) 9299 6799 or email us on ASTFinfo@astf.com.au

The GST form can de downloaded from the VECO website at
http://www.veco.ash.org.au/filestore/astf/gstform.doc


Thank you 

Bernadette Or
Manager, Organisational Services
Australian Student Traineeship Foundation