Private ruling: GST and entitlement to refund
Published: March 2012

Ruling: Q1: Is an entity (You) entitled to claim an input tax credit in relation to the provision of promotion and facilitation services provided to you by a supplier? | A1: Yes, you are entitled to claim an input tax credit in relation to the provision of promotion and facilitation services provided to you by a supplier. | Q2: Can the tax invoice in your possession be treated as a valid tax invoice as per subsection29-70(1A) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A2: Yes, the tax invoice in your possession can be treated as a valid tax invoice as per subsection29-70(1A) of the GST Act. | Q3: Was your Notification of entitlement to GST refund lodged within the four year time limit on refunds? | A3: Yes, your Notification of entitlement to GST refund was lodged within the four year time limit on refunds.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You informed that you only made taxable supplies, being taxable leases of consumer products. You also told us that you entered into a contractual arrangement with a supplier in 20xx. That arrangement involved the supplier promoting your GST taxable leasing services to its customers. That is, the supplier would provide services, promote and facilitate such that the retail customer would enter into a taxable lease arrangement directly with you. Under the contractual arrangements (between you and the supplier) the supplier received three forms of "consideration" from you for the relevant supplies made to you and broadly described as: · a commission for each lease entered into, and · an incentive or bonus, benchmarked against a profit pool generated by you, and · a "Final Commission" being an amount. The GST payable on the payment of this consideration is the subject of this submission and request for a private binding ruling (PBR). All three forms of consideration were contractually required to be paid by you to the supplier for and in connection with the bundle of taxable supplies made to you throughout the course of the contractual arrangements, including the Final Commission paid. It was contractually documented that the Original Shareholders (Shareholders) would make the payment of that Final Commission (i.e. consideration type c.) direct to the supplier. The Shareholders paid the supplier the Final Commission plus GST. The supplier remitted that GST to the ATO, and no credit or refund of that GST payable has been claimed by any entity. The supplier together with you and the Shareholders sought professional advice as to how to deal with the GST that was paid by the Shareholders to the supplier on the Final Commission. A request for a PBR was made by on behalf of the supplier seeking the ATO to rule. A PBR subsequently issued informing that the Final Commission payment made by you to the supplier was not consideration for a financial supply. That ruling provides that the supplier willingly surrendered its interests in the shares in exchange for a commission and it was considered that the supplier was not making a supply in relation to a financial supply and that its supply was taxable and subject to GST. Another ruling was also issued informing that the Shareholders: · were not entitled to reduced input tax credits on the Final Commission payment made to the supplier as the ATO did not consider that the supplier to be a financial supply provider for which it was paid a commission; and · that the commission payment made to the supplier was consideration for its taxable supplies of promoting and providing your facilities services in their retail outlets. The ruling concluded that the supplier did not facilitate the acquisition or supply of shares and considered that the supplier was paid a commission in relation to the remuneration payable in respect of their services rendered in connection with the promotion and provision of your facilities in certain of the supplier stores. You informed that you lodged a Notification of Entitlement to GST Refund. The Notification of Entitlement to GST Refund mentions that the supplier provided you with exclusive rights to promote your leasing products in its stores and that the supplier was paid commission fees" in return for exclusive promotional rights. The Notification of Entitlement to GST also mentions that the provision of exclusive promotional rights was treated as a taxable supply made by the supplier and that this is confirmed by the ruling issued. The supplier paid GST on the amount received and sent a tax invoice to the original Shareholders inclusive of GST. No input tax credit has been claimed yet.

Relevant legislative provisions: Section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 | Section 29-10 of the A New Tax System (Goods and Services Tax) Act 1999 | Section 29-70 of the A New Tax System (Goods and Services Tax) Act 1999 | Subsection 29-70(1A) of the A New Tax System (Goods and Services Tax) Act 1999 | Section 105-55 of the Taxation administration Act 1953

Reasons for decision: Summary: Summary Yes, you are entitled to claim an input tax credit in relation to the provision of promotion and facilitation services provided to you by the supplier. Detailed reasoning Section 11-20 the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) mentions that an entity is entitled to the input tax credit for any acquisition that it makes. Section 11-5 of the GST Act provides that an entity makes a creditable acquisition if it acquires anything solely or partly for a creditable purpose; the supply of the thing to the entity is a taxable supply; the entity provides, or is liable to provide, consideration for the supply; and the entity is registered, or required to be registered. An entity acquires a thing for a creditable purpose to the extent that it acquires it in carrying on its enterprise. However, an entity does not acquire the thing for a creditable purpose to the extent that the acquisition relates to making supplies that would be input taxed or is of a private or domestic nature. The acquisition of the service, promotion and facilitation (being the taxable 'Supplies') from the supplier to you was acquired in the carrying on of your enterprise. A taxable supply by the supplier is a supply made by them for consideration, the supply is made in the course or furtherance of their enterprise, the supply is connected with Australia and they are registered. However, it is not a taxable supply to the extent that it is GST-free or input taxed. In this case, the supplier agreed to provide services and to promote and facilitate the lease arrangement that allowed the retail customers to enter into a taxable lease arrangement directly with you. You provided consideration for this service, and the supplier issued you with tax invoices. It is conceded by both parties that the supplies were taxable supplies, which is a view shared by the Tax Office. Though the Original Shareholders contractually agreed to make the payment of the Final Commission, in this case, we consider that the supplier made the supplies to you and not to the Original Shareholders. Therefore, the services provided by the supplier were a creditable acquisition to you. As such you are the entity entitled to claim the input tax credits. Summary Yes, the tax invoice in your possession can be treated as a valid tax invoice as per subsection 29-70(1A) of the GST Act. Detailed reasoning Section 29-70 of the GST Act provides that a valid tax invoice is one that shows (among other things), if the total price of the supply is at least $1,000, the recipient's identity or ABN and what is supplied, including the quantity (if applicable) and the price of what is supplied. In this case you have provided us with a copy of the tax invoice issued by the supplier. That tax invoice contains the original shareholders name that provided the consideration on your behalf and their ABN (not yours) and does not clearly specify what was actually supplied. Subsection 29-70(1A) of the GST Act provides that a document issued by a supplier that does not meet all of the tax invoice requirements may be treated by the recipient as a tax invoice if it would comply with the requirements for a tax invoice but for the fact that it does not contain certain information and all of that missing information can be clearly ascertained from other documents given to the recipient by the supplier. Draft Goods and Services Tax Ruling GSTR 2011/D1 Goods and services tax: tax invoices (GSTR 2011/D1) represents the Commissioner's preliminary view about the way the law applies. GSTR 2011/D1 sets out the minimum information requirements for a tax invoice and also explains the circumstances under subsection 29-70(1A) when a recipient of a supply can treat a document as a tax invoice. Paragraph 92 of GSTR 2011/D1 states the following: Supplies and acquisitions made through agents 92. If an agent receives a non-compliant tax invoice for an acquisition made by a principal, the principal (recipient) may treat the document as a tax invoice if the information is contained in other documents provided to either the agent, or the principal, by the supplier. Paragraphs 87 to88 of GSTR 2011/D1 (reproduced below) provide guidance in relation to a document missing information and when such a document can be treated as a tax invoice. When a document that is missing information can be treated as a tax invoice 87. A document issued by the supplier that does not meet all of the tax invoice requirements may be treated by the recipient as a tax invoice if: · it is clear from the document that it is intended to be a tax invoice; · it would be a tax invoice but for the missing information, and · all of that missing information can be clearly ascertained from other documents given to the recipient by the supplier. 88. There is no requirement for these other documents to have been intended as a tax invoice. Other documents can include, for example, a supplier's product list, a business card, or an earlier tax invoice. You have provided a number of documents other than the tax invoice including the following: Amended & Restated Operating Agreement Amending Deed Proceeds Participation Deed Further Proceeds participation Deed Appendices We agree that the documents additional to the tax invoice you provided contain enough information to clearly ascertain the identity of the recipient of the supply and what was supplied. Therefore, the tax invoice in your possession can be treated as a valid tax invoice as per subsection 29-70(1A) of the GST Act. Summary Yes, your Notification of entitlement to GST refund was lodged within the four year time limit on refunds. Detailed reasoning Under the indirect tax law there is a four-year time limit, starting from the end of the relevant period, on the entitlement of taxpayers to refunds and credits, unless before the end of the four-year time limit the taxpayer notifies the Commissioner of their entitlement to a refund or credit or the Commissioner notifies taxpayers of their entitlement. Section 105-55 of the Taxation Administration Act 1953 provides that an entity is not entitled to a refund, other payment or credit to which this section applies in respect of a tax period unless within 4 years after the end of the tax period the entity notifies the Commissioner (in a notice of assessment or otherwise) that it is entitled to the refund, other payment or credit. Miscellaneous Taxation Ruling MT 2009/1: notification requirements for an entity under section 105-55 of Schedule 1 to the Taxation Administration Act 1953 (MT 2009/1) sets out the Commissioner's views on what constitutes notification by an entity to the Commissioner. MT 2009/1 provides that entitlements to input tax credits will expire 4 years after the end of the tax period to which they relate unless a claim to the refund or entitlement has been notified to the Commissioner before that time. In this case we accept that your notification was lodged on time.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Reasons for decision: These reasons for decision accompany the Notice of private ruling . | While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.