Grants Overview
Although called grants, payments from government (including ARC & NHMRC) and other funding bodies to UWA are not considered donations or gifts. They are payments made in exchange for UWA performing research and are therefore GST taxable. Only contracted research where UWA merely performs the research with no accountability to the donor may be considered a donation or gift that will not incur a GST.
GST is therefore payable to the Australian Tax Office (ATO) in the course of conducting research. This liability equates to 1/11th of the funding received (whether it be for salaries or equipment purchases). To bring UWA back to a cost neutral position 10% GST must therefore be added to requests for research funding. This is normally a one-line addition to the total rather than an addition to every line of the proposal/request.
The available funds credited to project grants will be the GST exclusive amount. On receipt or confirmation of the funding a tax invoice will be supplied to the funding agency by Financial Services to enable them to claim input tax credits back from the ATO. The result is that there will be no net cost to the funding agency.
Direct Costs of Research
In addition to the GST amount on grants outlined above, there is a GST component in the direct costs of research which is associated with the supply of goods and services by external parties. For example, the purchase of a computer from project funds to undertake the research will incur the GST. An invoice for these items will be approved by your department for the GST inclusive amount but only the GST exclusive amount will be costed to your research project account. The GST portion of the invoice will be paid by Financial Services to the ATO and will not affect your research project grant at all.
It is important to note that that there are costs incurred by your department that will not include a GST portion:
- Invoices from non-GST registered entities (organisations with an annual turnover of less than $50,000 will generally not be GST registered)
- Salaries, wages and allowances paid to employees
- Costs incurred overseas.
- Imported services.
If no GST is incurred on an incoming invoice then the full charge is costed to your research project account.
Long Term Contracts
GST will only apply to that research conducted after 30 June 2000. Funding for research performed prior to 1 July 2000 will not incur the GST. Funding for research must therefore be apportioned as to that which applies to the period prior to 1 July 2000 and that which applies to after 30 June 2000 in order to calculate the GST liability.
Contracts entered into prior to 1 July 2000 for the performance of research after 30 June 2000 are subject to transitional rules as follows:
Assuming the donor of the funding will be GST registered and entitled to claim input credits when invoiced by UWA:
- The contract is entered into prior to 8 July 1999 without an opportunity to review-the funding for research performed after 30 June 2000 is GST Free until 30 June 2005
- The contract is entered into prior to 8 July 1999 with an opportunity to review-the funding for research performed after 30 June 2000 is GST Free until the earlier of the date of review or 30 June 2005.
- All contracts entered into after 7 July 1999-the funding for research performed after 30 June 2000 is GST taxable.
In-Kind Contributions
When UWA receives in-kind contributions
- UWA is liable for a cash payment of GST of one eleventh of the value of the in-kind contribution. To bring UWA back to a cost neutral position 10% GST must therefore be added to requests for in-kind research support.
- A tax invoice will be sent to the provider of the in-kind support by Financial Services in order for them to claim input tax credits from the ATO. The result is that there will be no net cost to this organisation.
When UWA makes in-kind contributions
- A tax invoice must be obtained from the recipient of the in-kind support by Financial Services in order to claim input tax credits back from the ATO. The cash payment for the GST taxable portion of this in-kind contribution can therefore be claimed back from the ATO with no net cost to UWA.
- There are cash flow implications because UWA will only receive tax credits for the GST taxable component 14 days after receipt of the invoice from the recipient of the in-kind support.
Francis Zumbuhl
GST Project Manager
Financial Services
Phone 6488 2039
Fax 6488 1021
Email fzumbuhl@admin.uwa.edu.au
29 March 2000 | 