Private ruling: Are bank accounts input taxed for GST purposes?
Date of advice: 8 June 2018
Published: August 2018
Ruling period: Tax periods commencing 1 January 201X

Ruling: Q1: Can your bank account have a GST free status pursuant to Division 38 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, your bank account cannot have a GST free status pursuant to Division 38 of the GST Act.

Relevant facts and circumstances: You provide chiropractic services. Your bank account has been set up in the name of XYZ Pty Ltd. You contend that BSB: XXXX and BAN: XXXXXXX needs to be exempt from having to pay GST, to ensure the GST free status of chiropractic services applies to the monies as they pass through this distribution account. XYZ Pty Ltd is the entity that has the agreement with the chiropractors with a facilities service agreement. You have had legal advice to obtain this private ruling as the associated account.

Relevant legislative provisions: Item 5 Section 38-10 (1) - A New Tax System (Goods and Services Tax) Act 1999 | Sub-section 40-5(1) - A New Tax System (Goods and Services Tax) Act 1999 | Sub-regulation 40-5.09(03) - A New Tax System (Goods and Services Tax) Regulations 1999

Reasons for decision: Summary: Pursuant to Item 5 of section 38-10 (1) of the GST Act, chiropractic services are specified as a GST-free supply. As such, GST is not payable upon the supply of chiropractic services. Pursuant to subsection 40-5(1) of the GST Act, the provision of bank or credit union account by an Australian Approved Deposit Institution (ADI) is a financial supply and is input taxed. The term ‘financial supply' is defined in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) (subsection 40-5(2) of the GST Act). Item 1 in the table in sub-regulation 40-5.09(3) of the GST Regulations (Item 1) lists an interest in or under an (bank or credit union) account made available by an Australian ADI in the course of its banking business within the meaning of the Banking Act 1959, as an input taxed financial supply. In summary, the provision of a bank or credit union account by an Australian ADI is the provision of an input taxed financial supply and GST is not payable upon the supply of a bank account by an Australian ADI to you as its customer.