TGIF - Thankyou ATO for releasing a useless GST ruling about Strippers

We've heard on the news wire that due to the continuing economic crisis, more and more American women are turning to occupations in the adult industry. According to SMH via Associated Press:

"The tough job market is prompting a growing number of women across the country to dance in strip clubs, appear in adult movies or pose for adult magazines like Hustler.

Employers across the adult entertainment industry say they're seeing an influx of applications from women who, like Brown, are attracted by the promise of flexible schedules and fast cash. Many have college degrees and held white-collar jobs until the economy soured."

Yes, the current times are tough. Banks are crashing, Jim Cramer can't recommend any stocks, and Kevin Rudd is giving away $900 to boost the economy. Desperate times calls for desperate measures. Gone are the days of dropping "$3,000" on a lap dance. 

Which brings us to this related tax issue. One of our contacts reminded us of this tax ruling. A few years ago, 2004 to be exact, a GST ruling came out about the "supply of adult entertainment services: dancer collects payments and distributes entity's percentage". Summarised below:

Issue

Is the entity, a supplier of adult entertainment services, making a taxable supply to a customer under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when a dancer, engaged by the entity, performs a lap dance or striptease for one or more customers and the dancer collects the payment for the performance?

Decision

Yes, the entity is making a taxable supply to a customer under section 9-5 of the GST Act when a dancer, engaged by the entity, performs a lap dance or striptease for one or more customers and collects the payment for the performance.

This "transaction" has a GST component and is considered a taxable supply. We suppose it is a service performed by a professional, conducted in a business like manner. There is consideration and both parties walk away satisfied. 

Now try getting a reciept for that and telling your accountant.

As the rapper Akon would say:

Tax that, all on the floor

Tax that, give me some more

Tax that, 'til you get sore

Tax that, oh ooh

TGIF

From the AusTax team - Your Tax Insider.