DESCRIPTION
A special purpose vehicle entity (SPV) is established for the purpose of acquiring shares in a company as part of a takeover. 2. Another entity within the broader economic group, that is an associate of the SPV but not a member of the same GST group, is designated to provide "arranging services" for the SPV's acquisition of shares. (Arranging services is a reduced credit acquisition which entitles the recipient to an RITC). 3. Under an "arranging services" agreement with the SPV, the associate undertakes to acquire and pay for, amongst other things, tax, legal, public relations and investment banking services supplied by third parties. These services are performed exclusively for the purpose of the SPV's takeover and there is insufficient commercial rationale for the associate's involvement in the supply of these services. 4. The associate claims input tax credits on its purported acquisitions of those services. 5. The associate then makes a single 'bundled' supply of 'arranging services' to the SPV, calculating its fee by reference to the costs it incurred in paying the service providers. 6. The SPV claims to have made a reduced credit acquisition on the basis that its interposed associate is a financial supply facilitator that has arranged the SPV's acquisition of the shares. 7. The SPV claims an RITC on its acquisition from its associate. The SPV would not have been entitled to an RITC on some or all of the acquisitions, such as tax, legal and public relations services, had it acquired those services directly from the service providers (i.e. without the interposition of the associate to provide the 'bundled' supply of 'arranging services'). 8. The basic features of this arrangement can be summarised diagrammatically as follows: