1 Under the New Agreement, will you be making a creditable acquisition of intangible products under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), and, if so, are you entitled to the full input tax credit under section 11-25 of the GST Act in respect of the GST payable on the supply of the intangible products to you?
1 Yes, you are making a creditable acquisition of intangible products under section 11-5 of the GST Act, and you are entitled to the full input tax credit under section 11-25 of the GST Act in respect of the GST payable on the supply of the intangible products to you, as the acquisition is fully creditable. However, this is modified to the extent that the following apply: Taxation Administration Act 1953 Subsection 357-60(3) of Schedule 1 A New Tax System (Goods and Services Tax) Act 1999 Division 93 A New Tax System (Goods and Services Tax) Act 1999 Division 142 Question 2 Will you be entitled to receive a tax invoice from the Supplier (if requested) for all the intangible products to be transferred over the life of the New Agreement, pursuant to section 29-70 of the GST Act, upon entry into the New Agreement? Answer 2
Yes. It is assumed that all of the other requirements in section 9-5 of the GST Act are met by the Supplier and the transfer of the intangible products to you is a supply for consideration. Under this assumption the supply of intangible products are a taxable supply, and the supplier of a taxable supply must, within 28 days after the recipient of the supply requests it, give to the recipient a tax invoice for the supply as detailed in subsection 29-70(2) of the GST Act. Question 3 In determining the market value of your supply to the Supplier of an interest in a derivative (in partial return for the Supplier's supply of the intangible products under the New Agreement), can you utilise the same valuation method in determining the value of that supply of the intangible products that you are receiving, as was previously adopted by that Supplier and the Third Party under the Original Agreement, provided it was a reasonable method to determine the GST inclusive market value of that non-monetary consideration pursuant to GSTR 2001/6 Goods and services tax: non-monetary consideration (GSTR 2001/6)? Answer 3
Yes. Provided that the New Agreement is materially the same as the Original Agreement between the Third Party and the Supplier, and it is a reasonable valuation method pursuant to GSTR 2001/6. Question 4 Will you be entitled to input tax credits on your creditable acquisition of the intangible products to be transferred over the life of the New Agreement, where you would have had no entitlement under the Original Agreement either due to: • the reliance of a Supplier on a ruling that worked out the GST payable on the supply of the intangible products as nil (section 11-25 of the GST Act; subsection 357-60(3) of Schedule 1 to the Taxation Administration Act 1953 ), or • the operation of the four year time limit on claiming credits under section 93-5 of the GST Act? Answer 4
Yes. Provided you hold a valid tax invoice pursuant to subsection 29-10(3) of the GST Act. The New Agreement is a new contractual arrangement, which gives rise to a new supply of intangible products. Your entitlement to input tax credits on your creditable acquisition of intangible products under the New Agreement is unaffected by either the reliance of the Supplier on a ruling in relation to the Original Agreement or the expiration of the four year time limit in relation to attribution of input tax credits under the Original Agreement. This ruling applies for the following period : XX XXX 20XX to XX XXX 20XX.
A Third Party has a contractual arrangement with another entity referred to as the Original Agreement. You propose to enter into a deed of novation between that Third Party and the other entity that are parties to the Original Agreement, to create the proposed New Agreement. Under the terms of the New Agreement there is a transfer of mutual obligations between you and the other entity. You have an obligation to pay the other entity a sum of money if certain conditions are met. The other entity has a corresponding obligation to pay you a sum of money if certain opposing conditions are met. The other entity is additionally required to supply specified intangible products to you under the terms of the New Agreement. In the event the entity fails to supply the specified intangible products to you, the entity becomes liable to pay liquidated damages to you under the terms of the New Agreement. You are registered for goods and services tax (GST). The Third Party and other entity are also registered for GST. You account for GST on a non-cash (accruals) basis. You provided us with a template deed of novation and template New Agreement in support of your private ruling application.
A New Tax System (Goods and Services Tax) Act 1999 section 9-5 A New Tax System (Goods and Services Tax) Act 1999 section 11-5 A New Tax System (Goods and Services Tax) Act 1999 section 11-15 A New Tax System (Goods and Services Tax) Act 1999 section 11-25 A New Tax System (Goods and Services Tax) Act 1999 section 11-30 A New Tax System (Goods and Services Tax) Act 1999 section 29-10 A New Tax System (Goods and Services Tax) Act 1999 section 29-70 A New Tax System (Goods and Services Tax) Act 1999 Division 93 A New Tax System (Goods and Services Tax) Act 1999 section 93-5 A New Tax System (Goods and Services Tax) Act 1999 Division 142 Taxation Administration Act 1953 section 357-60 of Schedule 1 Reasons for decision Question 1 Under section 11-5 of the GST Act, there are four requirements