1 Do you make a creditable acquisition in relation to the payment of fees to *entity A* pursuant to section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
1 You make a creditable acquisition in relation to the payment of fees for supplies made on or after the date the legislative framework came into effect. However, you do not make a creditable acquisition in relation to the payment of fees for supplies made prior to the date the legislative framework came into effect. This ruling applies for the following period: *date* to *date* The scheme commenced on: *date*
*entity A* provides services to third parties. Usually, the third parties will pay for the services rendered. However, in circumstances where the third party cannot pay, you will pay for those services instead. The legislative framework came into effect on DD MM YYYY. Your payment obligation is legislated. There is no binding agreement between you and *entity A* for *entity A* to provide those services.
A New Tax System (Goods and Services) Tax Act 1999 section 9-5 A New Tax System (Goods and Services) Tax Act 1999 section 9-10 A New Tax System (Goods and Services) Tax Act 1999 section 11-5 A New Tax System (Goods and Services) Tax Act 1999 section 195-1
Section 11-20 of the GST Act states that you are entitled to input tax credits for your creditable acquisitions. Section 11-5 provides that you make a creditable acquisition if: (a) you acquire anything solely or partly for a *creditable purpose; and (b) the supply of the thing to you is a *taxable supply; and (c) you provide, or are liable to provide, *consideration for the supply; and (d) you are *registered, or *required to be registered. (* denotes a term defined in section 195-1 of the GST Act) Paragraph 11-5(d) of the GST Act is satisfied as you are registered for GST. The remaining elements of section 11-5 need to be considered. Section 9-5 of the GST Act provides that you make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with the indirect tax zone; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. What needs to be determined is whether *entity A* makes a supply to you in return for payment. Supply
The term 'supply' is defined in subsection 9-10(1) of the GST Act as 'any form of supply whatsoever.' Subsection 9-10(2) provides that a supply includes but is not limited to any of the following: (a) a supply of goods; (b) a supply of services; ... (c) a creation, grant, transfer, assignment or surrender of any right; (d) a *financial supply (e) an entry into, or release from, an obligation" (i) to do anything; or (ii) to refrain from an act; or (iii) to tolerate an act or situation; ... Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9) examines the meaning of 'supply' in the GST Act. The sixteen propositions for characterising and analysing supplies is outlined in paragraph 22 and 23 of GSTR 2006/9. Part 3 of GSTR 2006/9 discusses six propositions on how to analyse a tripartite arrangement (multiple entities) in relation to a supply. The most relevant propositions to consider in this case include: • Proposition 14 - a third party may pay for a supply but not be the recipient of the supply • Proposition 15 - one set of activities may constitute the making of two (or more) supplies
Paragraph 115 and 116 of GSTR 2006/9 states: 115. in more complex arrangements involving more than two entities, which the Commissioner refers to as tripartite arrangements, analysis may reveal: • a supply made to one entity but provided to another entity; • two or more supplies made; or • a supply made and provided to one entity and consideration paid by a third party. 116. As with two party transactions, the GST consequences of tripartite arrangements turn on identifying: • one or more supplies; • consideration (a payment, act or forbearance); • a nexus between the supply and consideration; and • to whom the supply is made. Proposition 15 in GSTR 2006/9 (paragraphs 217-221S) provides that one set of activities may constitute the making of two or more supplies. Paragraph 217A of GSTR 2006/9 refers to the Full Federal Court case of Federal Commissioner of Taxation v Secretary to the Department of Transport (Vic)
[2010] FCAFC 84 (Department of Transport), where the activity undertaken by the taxi operator of transporting the eligible passenger resulted in a supply of transport to the passenger as well as a supply to the Department of Transport of the service of transporting the eligible passenger. In this case we accept you make a creditable acquisition under section 11-5 of the GST Act in relation to payments for supplies made on or after the date the legislative framework came into effect. However, you do not make a creditable acquisition under section 11-5 of the GST Act in relation to payments for supplies made prior to the date the legislative framework came into effect.