Research grants received by the University are likely to be considered as taxable supplies and therefore will give rise to a GST liability.
This is because the University generally undertakes to provide research in return for the grant money. This is a supply for the purposes of the GST legislation.
That said, the GST component of income and expenditure will not appear in the PeopleSoft reports for that grant as it is accounted for and reported on separately to the ATO. In preparing research grant, contract and consultancies budgets, researchers should be aware that GST will be applicable in most cases.
Generally, where research is provided to an overseas entity and is not supplied to an Australian entity, the transactions are treated as GST-free. GST does not apply to goods and services purchased overseas. This includes international airfares and travel.
Preparing the budget
When costing the research budget, line items should be quoted at a GST exclusive price. For example, if a piece of equipment costs $1 000 plus $100 for GST, quote $1 000 in the budget. If an infrastructure charge is levied on a budget, then it may be included in the line items separately or added in to the line items so that the infrastructure charge becomes ‘hidden’.
Once all the line items have been totalled, 10 per cent is then added for GST.
How to prepare a budget, including infrastructure costs as a line item.
| Item | GST exclusive | GST @ 10% | GST inclusive |
|---|---|---|---|
| Olympus camera | $1 000 | $100 | $1 100 |
| RA salary + on-costs | $4 000 | $400 | $4 400 |
| Airfare to Italy | $2 500 | GST-free | $2 500 |
| Subtotal | $8 000 | ||
| Infrastructure @ 35% | $2 800 | ||
| Budget total | $10,800 |
How to prepare a budget, including infrastructure costs in line items.
| Item | GST exclusive | GST @ 10% | GST inclusive | Total cost (including 35% Infrastructure) |
|---|---|---|---|---|
| Olympus camera | $1 000 | $100 | $1 100 | $1 485 |
| RA salary + on-costs | $4 000 | $400 | $4 400 | $5 940 |
| Airfare to Italy | $2 500 | GST-free | $2 500 | $3 375 |
| Budget total | $10,800 |
Exceptions
GST does not apply to contracts signed before 8 July 1999.
In the case where the funding is deemed to be an appropriation from one government entity to another there is no GST added to the total.
Advice from the Australian Tax Office (ATO) suggests that this is the case with the NHMRC. Similarly, grants which are appropriations to universities under the Higher Education Funding Act (HEFA), such as ARC funding, attract no GST.
Other government department agencies, notably the ‘rural industries’ – including GRDC, RIRDC, HRDC and DRDC have formed the opinion that they will be liable to pay GST on research grants to universities, and therefore GST should be added.This is currently the best advice available as rulings are still being sought on these and other areas and the situation remains unclear.
If you have any questions about this or GST in general, please contact the UWA Office of Finance and Resources, Financial Services Tax.
University information
CRICOS Code: 00126G
