Private ruling: GST matters relating to an agreement under which a special bank card is issued by an entity to cardholders
Date of advice: 20 October 2021
Published: January 2022

Ruling: Q1: The Commissioner was asked to rule whether: 1. an entity is entitled to claim input tax credits under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 on goods and services tax (GST) included in the Contract Price that is payable to a service provider, 2. a particular recall value under the Contract is consideration for a taxable or an adjustment to a taxable supply, 3. the provision of a particular 'bank card' to the Cardholders is a taxable supply, 4. an entity makes a taxable supply to a Cardholder by purchasing, and arranging for the service provider to load value on to the relevant 'bank card' held by a Cardholder, 5. any change to the Contract Price as a result of the service provider failing to meet specified service levels represents either a reduction in, or an adjustment to, the Contract Price for GST purposes, 6. any amounts paid by the service provider to an entity under an agreement between the service provider and the entity as liquidated damages consideration for any supply made by the entity and therefore subject to GST, 7. the service provider makes a taxable supply to an entity when a termination payment is payable by the entity to the service provider where the contract is terminated by the entity as a result of a certain event, 8. GST is payable by a service provider only to the extent where monetary consideration is received (net of discounts) for goods and/or services supplied by the service provider to an entity in accordance with a particular clause of a contract. | A1: The Commissioner ruled as follows: 1. Yes, the entity is entitled to claim input tax credits under section 11-20 of the GST Act on goods and services tax (GST) included in the Contract Price that is payable to a service provider. 2. No, a particular recall value under the Contract is not consideration for a taxable or an adjustment to a taxable supply. 3. No, the provision of a particular 'bank card' to the Cardholders is not a taxable supply. 4. No, the entity does not make a taxable supply to a Cardholder by purchasing and arranging for the service provider to load value on to the relevant 'bank card' held by a Cardholder. 5. Yes, a change to the Contract Price as a result of the service provider failing to meet specified service levels represent either a reduction in, or an adjustment to, the Contract Price for GST purposes. 6. No, an amount paid by the service provider to an entity under an agreement between the service provider and the entity as liquidated damages is not consideration for any supply made by the entity and therefore subject to GST. 7. Yes, the service provider makes a taxable supply to an entity when a termination payment is payable by the entity to the service provider where the contract is terminated by the entity as a result of a certain event. 8. Yes, GST is payable by a service provider only to the extent where monetary consideration is received (net of discounts if any) on goods and/or services supplied by the service provider to an entity in accordance with a particular clause of a contract.


Relevant legislative provisions: Section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 | Section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 | Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 | Section 40-5.09 of the A New Tax System (Goods and Services Tax) Regulations 2019 | Section 40-5.12 of the A New Tax System (Goods and Services Tax) Regulations 2019