GST and Appropriations (Australia) Procedures

Parent Policy

Goods and Services Tax (Australia) Policy

An appropriation as defined by the ATO ruling GSTR 2006/11 Goods and services tax: appropriations, is a payment of a funding nature made by a government related entity to another government related entity which is specifically covered by an appropriation under an Australian law. For an appropriation to be specifically covered, the purpose of the payment and the amount of the payment must be specified. GST does not apply to appropriations.

Definition of terms

Appropriation Act: An Act of Parliament to appropriate money out of the Consolidated Revenue Fund for the ordinary annual services of the Australian Government, and for related purposes
ATO: Australian Taxation Office
GST: Goods and Services Tax as defined in A New Tax System (Goods and Services Tax) Act 1999
SAP: The University’s Finance System

Documentation Required for all Appropriations

• Where a granting body asks that an invoice be prepared with no GST because the payment is considered to be an appropriation, a copy of the relevant appropriation documentation (including the statute or delegated legislation that authorises the expenditure of money) must be obtained from the granting body and filed with the copy of the invoice.
• The details of an appropriation, such as particular information about its purpose, may not always be specified by the Appropriation Act. In many cases, the purpose will be documented in very general terms in the appropriation Act, but explained further in relevant supporting documents.
• The details relevant to a payment, being its purpose and amount, that show that it is specifically covered by an appropriation, must be specified in the Appropriation Act taken together with relevant supporting documents.
• Other examples of supporting documentation include:
  • budget papers that specify the purpose and amount of the payment
  • portfolio budget statements
  • agency budget statements
  • Ministerial Statements or Speeches related to the Budget, or Appropriation Act or policy to which the appropriation Act relates
  • Government released Budget overview documents
  • Ministerial media releases related to the Budget and/or policy to which the Appropriation Act relates
  • Budget documentation (background documents prepared at an agency level in the process of seeking funds to be included in that budget) related to the Appropriation Act
  • Written agreements such as Funding Deeds, Service Level Agreements, Deeds of Agreement or Memoranda of Understanding between government related entities;
  • Computer records and accounts which link payments to appropriation sources through mechanisms such as cost codes; or
  • Letters from a Minister to government related entities.
• The relevant supporting documents are on their own insufficient to establish whether the payment is specifically covered by an appropriation and must be used in conjunction with the relevant Appropriation Act, to show how the payment is sourced from an appropriation and its purpose.
• Where it is determined that the income is an appropriation it should be coded to S8 in SAP
• The appropriation funds are outside the scope of the GST when they initially come into the University. When the funds are spent for taxable supplies, the normal rules of GST apply.
• A copy of the invoice and the supporting documentation must be forwarded to Corporate Finance

Responsibility

Departmental Finance Officer

Review appropriation documentation to ensure it is sufficient to support recording the transaction as an appropriation.

Responsibility

Taxation Accountant (GST)

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