GST on Fundraising
Most fundraising activities attract GST, and we fairly regularly see GST-registered organisations falling foul of this requirement.
Wherever there is an exchange of goods or services for money, it is a GST liable transaction. Sausage sizzles, quiz nights, sales at fairs etc all come under this.
The exception is the sale of donated goods, which is an exempt activity. Where you are selling donated goods, no GST is payable on the proceeds, however there is also no GST claimable on any expenses associated with this activity, such as a stall fee, venue hire or other associated costs.
Raffles often trip organisations up, as the raffled items may have been donated. However, in a raffle you are not selling those items, you are selling a chance to win them, which is taxable. If you auction such items, no GST would be payable as this is a straight sale.
Doing a sausage sizzle with donated sausages, or selling lemon juice made for free with lemons from your members’ gardens, are also not exempt activities, because in both cases you are not selling the donated item, but a product where you merely used them as an ingredient, and the making of which also involved labour.
We would not advise trying to label such sales as ‘donations’ to get out of paying GST. Unless items are given away for free without an expectation of payment, it remains a sale even with a ‘donation’ label.