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Are the amounts received by the Entity, being a percentage share of the resolution sum under a Litigation Funding Agreement, consideration for input taxed financial supplies under Division 40-A of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Yes. Under the terms of the Litigation Funding Agreement, the Liquidator has a contingent debt. That is, at any given time the Liquidator has a presently existing obligation placed on it to make a payment to the Entity on the happening of an event, namely on the success of the litigation and the receipt of a Resolution Sum (a contingency). The right to receive this contingent payment is an interest in a debt for the purposes of Item 2 in the table at subsection 40-5.09(3) of the GST Regulations. See ATO Interpretative Decision ATO ID 2007/29 Goods and Services Tax GST and contingent debt. Given the above and subject to other relevant requirements in subsection 40-5.09(1) being satisfied, the amounts received by the Entity, being a percentage share of the Resolution Sum under the Litigation Funding Agreement, is consideration for an input taxed financial supply made by the Entity under Subdivision 40-A of the GST Act. As such, the amounts being a percentage share of the Resolution Sum received by the Entity, are not subject to GST. This ruling applies for the following periods : DD MM YYYY to DD MM YYYY The scheme commenced on: Dd MM YYYY

The Entity is a litigation funder providing cover for adverse costs and disbursements to liquidators and claimants involved in legal proceedings. Under the Entity's standard funding agreements: •                 The Entity undertakes to pay 100% of adverse costs and disbursements, as well as legal and counsel fees, as required throughout the proceedings. •                 The Entity's remuneration is wholly contingent upon a successful recovery. •                 If proceeds are recovered (resolution sum) they are applied as follows: -       Legal costs are paid first, -       The Entity receives an agreed fixed percentage of the balance, -       The remainder is distributed to the claimant or liquidator. •                 If the litigation is unsuccessful and no proceeds are recovered, the Entity receives no return. •                 The conduct of the proceedings remains with the liquidator or claimant, although the Entity must be consulted on significant decisions.

•                 Each agreement states that the parties regard the arrangement as a financial supply under Subdivision 40 of the GST Act but provides that GST will be recoverable from the claimant/liquidator if it is later determined to apply. •                 The Entity has entered, and may continue to enter, into similar arrangements with multiple clients on materially the same terms.

A New Tax System (Goods and Services Tax) Act 1999 Subdivision 40-A A New Tax System (Goods and Services Tax) Regulations 1999 section 40-5.09