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1 Is the Entity 1 making a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when it receives a payment from Entity 2 under the mechanism?

1 Yes. The Entity 1 is making a taxable supply when it receives payment from Entity 2 under the mechanism. Question 2 Is the Entity 1 making a creditable acquisition pursuant to section 11-5 of the GST Act when it makes a payment under the mechanism? Answer 2 Yes. The Entity 1 is making a creditable acquisition when it makes a payment under the mechanism where Entity 2 is registered or required to be registered for GST.

You make payments and receive payments under a mechanism.

A New Tax System (Goods and Services Tax) Act 1999 section 9-5 A New Tax System (Goods and Services Tax) Act 1999 subsection 9-10(1) A New Tax System (Goods and Services Tax) Act 1999 section 11-5 A New Tax System (Goods and Services Tax) Act 1999 section 11-20