Issue
Is the entity, a trustee of a superannuation fund, making a reduced credit acquisition under subsection 70-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it engages an auditor to provide services in compliance with industry regulatory requirements?
Decision
No, the entity is not making a reduced credit acquisition under subsection 70-5(1) of GST Act when it engages an auditor to provide services in compliance with industry regulatory requirements.
Facts
The entity is a trustee of a superannuation fund. The entity, in its capacity as trustee for the superannuation fund, engages an auditor to provide services in compliance with industry regulatory requirements.
The entity is not entitled to a full input tax credit on this acquisition as the acquisition relates to making financial supplies and the entity exceeds the financial acquisitions threshold under Division 189 of the GST Act.
The entity is registered for goods and services tax (GST).
Reasons for Decision
According to subsection 70-5(1) of the GST Act, the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) may provide that acquisitions of a specific kind that relate to making financial supplies can give rise to an entitlement to a reduced input tax credit. These are reduced credit acquisitions.
The table in subregulation 70-5.02(2) of the GST Regulations (the table) sets out those acquisitions that are reduced credit acquisitions.
Item 24 in the table lists those administrative functions in relation superannuation schemes that are reduced credit acquisitions. Item 24(h) in the table specifically excludes auditing services done in compliance with industry regulatory requirements from being a reduced credit acquisition.
The entity has engaged an auditor to provide auditing services in compliance with industry regulatory requirements. As such, the acquisition is not a reduced credit acquisition under item 24 in the table. Furthermore, the acquisition of the auditing services is not covered by any other item in the table.
Therefore, the entity is not making a reduced credit acquisition under subsection 70-5(1) of the GST Act, when it engages an auditor to provide services in compliance with industry regulatory requirements.