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GST and In-Kind and Barter Transactions (Australia) Procedures

Parent Policy

Goods and Services Tax (Australia) Policy

One of the elements of a taxable supply is that 'consideration' is received for the supply. Consideration is not limited to money, but can include in-kind contributions or barter transactions. A GST liability occurs on either the issue of an invoice or payment of the consideration. Hence when Monash receives its part of a barter or in-kind transaction this is deemed payment of the consideration for the supply and a GST liability arises. Monash must remit 1/11th of the value of the supply to the ATO. Swapping complying tax invoices in the same month ensures that the GST liability and the input tax credit to be claimed back from the ATO offset each other.

Definition of terms

ATO: Australian Taxation Office
GST: Goods and Services Tax as defined in A New Tax System (Goods and Services Tax) Act 1999
Input Tax Credit: An entitlement arising under section 11-20 or 15-15 of A New Tax System (Goods and Services Tax) Act 1999. The amount of an input tax credit for a creditable acquisition is an amount equal to the GST payable on the supply of the thing acquired.
Barter: The direct exchange of goods or services for other goods or services without the exchange of money
In-Kind: Where benefits are provided without the exchange of money such as staff and infrastructure
Consideration: as defined in A New Tax System (Goods and Services Tax) Act 1999. It includes any payment, or any act or forbearance, in connection with a supply of anything; and any payment, or any act or forbearance, in response to or for the inducement of a supply of anything
Recipient Created Tax Invoice (RCTI): An invoice which is issued by the entity that receives the taxable supply (the recipient) rather than the actual supplier. This is permitted where both the recipient and the supplier are registered for GST and, at the time the RCTI is issued, the entities have a current written agreement with each other stating the supplies covered (RCTI Agreement).
SAP: The University’s Finance System

In-Kind and Barter Transactions

  • Where Monash University is a party to an in-kind or barter transaction, a standard tax invoice must be received from the other party and a tax invoice issued to this party by the University. The other party to the agreement must be contacted to ensure that both invoices are created in the same month.
  • The invoice raised and the invoice received must be signed by the person with the appropriate financial delegation within the department/centre and sent to Corporate Receivables for processing.

Responsibility

Departmental Finance Officer

  • To ensure that the two transactions offset each other, the invoices raised and received must be posted to the same general ledger account number (207615), have the same dollar amount, GST amount and GST status.

Responsibility

Corporate Receivables Officer

Recipient Created Tax Invoice Agreements

When entities involved in an inkind/barter transaction choose to enter into a Recipient Created Tax Invoice Agreement for the inkind/barter supply, one party will issue both a tax invoice and a recipient created tax invoice. Each party must account for the full amount of GST payable on the supply that it makes.

Responsibility

Corporate Finance

If the external party agrees to create the invoice and the RCTI:

  • The documents received by the department must be forwarded to Corporate Finance for processing.

Responsibility

Departmental Finance Officer

  • An RCTI agreement must be in place before the transactions are processed. This should be generated by the external party creating the invoices and the RCTIs but if they do not have a standard agreement, one must be created by Monash University.

Responsibility

Taxation Accountant (GST)

  • All RCTI agreements must be signed by Corporate Finance Division

Responsibility

Divisional Director, Corporate Finance

  • A journal to balance sheet general ledger account number 207615 must be posted to record the transaction including the GST paid and collected.

Responsibility

Taxation Accountant (GST)

If the University wishes to take responsibility for creating the invoice and the RCTI:

  • The Taxation area within Corporate Finance must be notified

Responsibility

Departmental Finance Officer

  • An RCTI agreement must be created and signed by both organisations

Responsibility

Taxation Accountant (GST)

  • A tax invoice for the inkind transaction must be created in SAP using the general ledger account number 207615.

Responsibility

Corporate Receivables Officer

  • A journal must be posted in SAP to record the RCTI, using the same balance sheet general ledger account used for the invoice (207615) and a tax code of P1. This transaction will offset the invoice created as no actual payment of funds is required. The tax invoice and the RCTI journal must be forwarded to the Taxation area within Corporate Finance.
  • An RCTI must be created which contains all the information required (refer to the procedure for Tax Invoices – Accounts Payable)
  • The original tax invoice and RCTI must be sent to the external organisation within 28 days of being raised. Copies must be forwarded to the department receiving the supply.

Responsibility

Taxation Accountant (GST)

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