National Resource Sharing Working Group

Interlending Services and the GST - Statement by the National Resource Sharing Working Group (May 2000)

This statement aims to set out matters which libraries should consider to meet the requirements of the Goods and Services Tax (GST) as it applies to interlending services.

The statement will be revised and expanded as further information comes to hand.

This statement is intended to provide general information and, while every effort has been made to ensure accuracy, it should not be relied on as a substitute for professional legal or financial advice for specific organisations or circumstances.

Introduction

Fees for interlibrary lending and document delivery services will be subject to the new GST from 1 July 2000.

The new tax system brings with it new requirements for financial management and record keeping for interlending services.

Prices quoted are required to include the GST, which is equal to 1/11th of the tax inclusive price. In effect ILL suppliers will need to remit 1/11th of revenue received from ILL to the Australian Taxation Office (ATO) as GST and to maintain appropriate records. In most cases requesting libraries will be able to claim input credits for GST paid on ILLs supplied to them, provided that they have the appropriate records. Each library should check whether its organisation provides services which are GST-free or is able to claim input credits as part of its business.

The GST applies to payments and considerations for goods and services. ALIA has sought advice from the ATO on whether ILL’s supplied for a “consideration”, for example under reciprocal arrangements between libraries, will be subject to the GST. ALIA has recently released a document, The New Tax System: the goods and services tax and library and information services (ALIA, April 2000, sent to all institutional members and available to ALIA members on request). The document includes advice to ALIA members on the status of ILLs supplied under reciprocal arrangements and on services provided free of charge as a public good. The NRSWG understands that other organisations are also seeking advice from the ATO on the tax status of specific ILL service arrangements.

Services supplied overseas are not subject to the GST.

A tax invoice or cash receipt is required to substantiate GST. Goods and services over $50 in value must be supplied with a tax invoice. If the supply is less than $50 a receipt or record is needed.

The GST applies to transactions between separate entities, that is between organisations with different Australian Business Numbers (ABN); but not to transactions within an enterprise.

In some cases the GST will apply to charges to end users for the supply of items obtained though ILL. For example, GST will be payable on services to external end users such as private citizens using State or public library services. GST will not apply to internal charges in an organisation for supplying an item obtained through ILL, such as when a library supplies to another department within a business or entity operating under the same ABN.

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Issues

Payment methods

Libraries will need to consider the methods of payment they will use as a requester and accept as a supplier.

Currently there is a range of payment methods in use in the interlending system. The most widely used are ALIA ILL vouchers and the Kinetica Document Delivery (KDD) Payments Service. Monthly accounts, cash, credit card and cheque payments are less frequently used.

The KDD Payments Service will comply with GST requirements for all transactions where a charge is made for supply. The KDD Payments Service does not cover transactions where there is no charge for supply, including reciprocal arrangements. The National Library will advise all users of the KDD Payments Service on this matter shortly.

ALIA released preliminary information on arrangements it will be making ensure that the ILL voucher system complies in aliaNEWS 16 February 2000 and in InCite (March 2000, p.6-7)). In its April 2000 statement on The New Tax System, ALIA has included detailed information for its institutional and voucher members on record keeping and reporting to facilitate meeting GST requirements using the voucher system.

Large supplying libraries are reviewing their financial management arrangements and the payment methods they will accept. For example, the National Library has announced that after 31 May 2000 it will no longer accept ALIA vouchers and has outlined the payment methods it will accept in future (http://www.nla.gov.au/dss/paymentMethods.html).

ILL departments and libraries may wish to investigate the availability of corporate credit cards within their organisations to pay ILL fees and their ability to accept credit card payments by mail, fax or electronically.

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Request forms, invoices, receipts and other forms and stationery

GST compliant tax invoices and receipts have specific requirements. Libraries are advised to consult with financial management advisers in their organisations on these requirements.

Electronic, fax and printed request forms may need to be modified or special stamps made up to meet the record keeping and reporting requirements of both supplying and requesting libraries. (For example, including the information required for a tax invoice or incorporating details to allow for payment by credit card)

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Record keeping and reporting

One of the impacts of the GST is that it becomes more important for financial transactions associated with ILL services to be processed through the financial management systems of parent organisations. For the requesting side, this will ensure that input tax credits can be claimed and substantiated. On the supplying side, this will ensure that the appropriate amount of tax is paid.

It is recommended that each library or ILL department seeks financial management advice within its organisation.

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Pricing and prices

The Australian Interlending Code sets out advisory charges for interlending services which are based on a survey of costs of a range of supplying libraries (ACLIS Interlending Costs Study 1997). Within our co-operative resource sharing system there are many advantages to standardised advisory charges.

The introduction of the GST means that the pricing of goods and services will be under close scrutiny by the Australian Competition and Consumer Commission (ACCC). The Federal Government has given the ACCC special powers during the transition to the new tax system to have oversight of any price changes brought about due to the tax changes. The purpose of this is to prevent price exploitation of consumers. The effect of this aspect of the new tax system is that there may be requirements within individual organisations to review costs and prices and this in turn may cause these organisations to review the use of standard charges

National Resource Sharing Working Group
8 May 2000

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