Issue
Is an entity, an Australian authorised deposit-taking institution (ADI), making a financial supply of an interest under either item 1 in the table in subregulation 40-5.09(3) or subregulation 40-5.09(4) of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations), when it provides transaction information, for not more than $1,000, to a client (also an Australian ADI) in respect of a transaction undertaken by a customer of the client?
Decision
No, the entity is not making a financial supply of an interest under either item 1 in the table in subregulation 40-5.09(3) or subregulation 40-5.09(4) of the GST Regulations when it provides transaction information, for not more than $1,000, to a client ADI in respect of a transaction undertaken by a customer of the client ADI.
Facts
The entity is an Australian ADI that carries on a banking business within the meaning of the Banking Act 1959 .
The entity provides transaction information to clients that are also Australian ADIs.
The entity also provides a payment system to its client ADIs.
The transaction information relates to transactions undertaken by customers of the client ADI.
A client ADI may or may not hold an account with the entity.
The applicable fee for each request does not exceed $1,000.
The entity is registered for GST.
Reasons for Decision
Under subsection 40-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), a financial supply is input taxed. Subsection 40-5(2) of the GST Act provides that a financial supply has the meaning given by the GST Regulations.
Subregulation 40-5.09(1) of the GST Regulations provides that the provision, acquisition or disposal of an interest mentioned in subregulation 40-5.09(3) or 40-5.09(4) of the GST Regulations is a financial supply if: (a) the provision, acquisition or disposal is: • for consideration • in the course or furtherance of an enterprise • connected with Australia, and (b) the supplier is: • registered or required to be registered for GST, and • a financial supply provider in relation to the supply of the interest.
Item 1 in the table in subregulation 40-5.09(3) of the GST Regulations lists, as a financial supply, an interest in or under an account made available by an Australian ADI in the course of: • its banking business within the meaning of the Banking Act, or • its State banking business.
For there to be a financial supply under item 1 in the table in subregulation 40-5.09(3) of the GST Regulations, a supply must firstly be capable of characterisation as the supply of an interest in an account made available by an Australian ADI.
It is possible for a supply of transaction information to be a supply of an interest in an account under item 1 in the table in subregulation 40-5.09(3) of the GST Regulations. This will be the case when information is supplied to a client and it relates to a transaction on the client's account. Regulation 40-5.11 of the GST Regulations operates to make the provision of transaction information a financial supply because it relates to the supply of an account in that circumstance.
However, when a client ADI obtains transaction information on behalf of a customer, the transaction information is in connection with a supply of an interest in an account by the client ADI to its customer. The service provided by the entity merely assists the making of a supply by the client ADI to its customer.
It follows that the provision of the transaction information, by the entity to the client ADI, does not involve the making of a financial supply of an interest in an account under item 1 in the table in subregulation 40-5.09(3) of the GST Regulations. Even if the client ADI has an account with the entity, the transaction information is not provided in relation to an interest in an account by the entity to the client ADI. The transaction information is provided to the client ADI because an interest in a payment system is also supplied by the entity to the client ADI.
Subregulation 40-5.09(4) of the GST Regulations states that a supply (to which item 1 in the table in subregulation 40-5.09(3) of the GST Regulations does not apply) by an Australian ADI for a fee of not more than $1,000 is a financial supply if: (a) the item would have applied to that supply in relation to an account with the ADI; or (b) ...
As the provision of transaction information would not have been treated as a financial supply under item 1 in the table in subregulation 40-5.09(3) of the GST Regulations if the client were an account holder, subregulation 40-5.09(4) of the GST Regulations has no application.
A supply of transaction information by the entity to its client ADI, when the information relates to a transaction by a customer of the client ADI, will be a taxable supply where the requirements of section 9-5 of the GST Act are satisfied.