Private ruling: GST and payment system
Date of advice: 21 June 2024
Published: 5 August 2024
Ruling period: xx June 20xx to xx June 20xx
Date scheme commenced: xx June 20xx

Ruling: A2: Yes, Entity A's supply of administrative services is GST-free under item 2 in the table in subsection 38-190(1) of the GST Act. Consistent with the view in GSTR 2004/7, the supply of the administrative services by Entity A to the Operator is a supply to a non-resident who is not in Australia when the services are performed. In satisfaction of table item 2(a) in subsection 38-190(1), the services are neither a supply of work physically performed on goods situated in Australia when the work is done nor a supply directly connected with real property situated in Australia. Further, subsections 38-190(2), (2A) and (3) do not apply to negate the application of item 2. It follows that the supply of the administrative services by Entity A to the Operator is a GST-free supply. | Q1: Is the acquisition of facilitation services by Entity A from Entity D a reduced credit acquisition under Division 70 of the GST Act? | A3: Yes, the acquisition of facilitation services by Entity A from Entity D is a reduced credit acquisition under Division 70 of the GST Act.

Relevant facts and circumstances: Entity A carries on an enterprise and is registered for GST. Entity B carries on an enterprise. Entity C (Operator) is a non-resident entity that owns and operates a payment system. This entity has established the rules and procedures of the system and can grant access to participate in the system. Entity A and the Operator entered into an agreement under which Entity A became a participant in the payment system. Entry into the agreement bound the parties to the rules and procedures of the system. Entity A entered into an agreement with Entity B under which Entity A provided Entity B with a credit facility. This facility when called upon by Entity B obligates Entity A to settle a debt with a third party provider of goods and services, following which Entity B is required to pay the relevant amount to Entity A. The relationships between the relevant parties are governed under separate bilateral contracts. There is no single tripartite arrangement. Under the rules of the payment system, Entity A is entitled to a fee for administrative services it supplies to the Operator. Entity A has an agreement with Entity D for the acquisition of facilitation services. Copies of the relevant agreements were relied upon in making this private ruling.

Relevant legislative provisions: 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 11-20 | A New Tax System (Goods and Services Tax) Act 1999 Section 40-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 70-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 38-190 | A New Tax System (Goods and Services Tax) Regulations 2019 Section 40-5.09 | A New Tax System (Goods and Services Tax) Regulations 2019 Section 40-5.12 | A New Tax System (Goods and Services Tax) Regulations 2019 Section 70-5.02


Question 1(a): Does Entity A make a financial supply to Entity B under the Deed being an interest in a 'debt, credit arrangement or right to credit' under item 2 in the table in subsection 40-5.09(3) of the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations)? | Answer: Yes, Entity A makes a financial supply to Entity B under the Deed being an interest in a 'debt, credit arrangement or right to credit' under item 2 in the table in subsection 40-5.09(3) of the GST Regulations. | Relevantly, we consider the features of the current arrangement are similar to those found in a charge card facility such that Entity A makes a financial supply upon entry into the Deed. Each transaction made by Entity B through the use of the facility is part of an ongoing supply of the facility, instead of being a separate supply in itself. | Consequently, we consider that the supply of the facility by Entity A to Entity B falls within the meaning of a credit arrangement under item 2 in the table in subsection 40-5.09(3). On this basis, it is considered an input taxed supply. | Question 1(b): Does Entity A make a supply of its administrative services to Entity C (Operator) that is GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?