GST and Art Competitions
11 December 2007
From time to time, Local Governments and other non-profit entities host ‘acquisitive’ art competitions. Some of these competitions attract large numbers of entries and have substantial prize money. The GST treatment of the prize money awarded by the host to the winner will differ depending on the specific facts of each case. The following general rules should be applied:
- By providing a work of art for exhibition in an art competition, the artist is making a supply (event participation) to you. However, this supply is for no consideration unless the artist wins a prize.
- Where the artist wins a prize, there is consideration being provided by the host
- If the artist is registered for GST, the prize money is consideration for a taxable supply by the artist, and therefore the prize amount should be GST inclusive. This assumes the entry was made in the course of an enterprise.
- If the artist not is registered for GST, the prize money is consideration for a supply by the artist that is not taxable, and therefore, the prize amount should be GST exclusive.