GST and money transfer services

Is the entity, a supplier of money transfer services, making a financial supply that is an input taxed supply under subsection 40-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it facilitates a money transfer for its Australian customer to an overseas beneficiary?

No, the entity is not making a financial supply that is an input taxed supply under subsection 40-5(1) of the GST Act when it facilitates a money transfer for its Australian customer to an overseas beneficiary. The entity is making a taxable supply under section 9-5 of the GST Act.

The entity is a supplier of money transfer services. The entity facilitates the process of money transfer by collecting money from its customer in Australia, depositing money into its bank account, and directing its bank to transfer that money via telegraphic transfer, to an agent overseas. The agent then sends the money to a beneficiary overseas, based on information given by the entity.

The entity charges its Australian customer a fee for this service.

The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

Under subsection 40-5(1) of the GST Act, a financial supply is input taxed. Subsection 40-5(2) of the GST Act provides that 'financial supply' has the meaning given by the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).

Subregulation 40-5.09(1) of the GST Regulations provides that in certain circumstances, the provision, acquisition, or disposal of an interest listed in subregulation 40-5.09(3) or (4) of the GST Regulations, is a financial supply.

Item 9 in the table in subregulation 40-5.09(3) of the GST Regulations (Item 9) lists 'Australian currency, the currency of a foreign country, or an agreement to buy or sell currency of either kind'. However, a fee for the facilitation of the transfer of the money overseas is not covered by Item 9. In addition, the supply is not covered by any other item in the table in subregulation 40-5.09(3) of the GST Regulations, or by subregulation 40-5.09(4) of the GST Regulations.

Therefore, as the supply is not a financial supply under subregulation 40-5.09(1) of the GST Regulations, the supply is not input taxed under subsection 40-5(1) of the GST Act.

The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under any other provisions in Division 40 of the GST Act. As such, the entity is making a taxable supply under section 9-5 of the GST Act when it facilitates a money transfer for its Australian customer to an overseas beneficiary.