Private ruling: GST - input tax credits
Date of advice: 13 December 2024
Published: 20 January 2025
Ruling period: 1 July 20XX till quarter ending 31 December 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the fee consideration for a supply by the adviser to the Trustee of the Superannuation Fund (you) for the purposes of section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. | Q2: If the answer to Question 1 is yes, are you entitled to a reduced input tax credit? | A2: Response not necessary.

Relevant facts and circumstances: You are the Trustee of a Superannuation Fund and provide a range of financial products and services and are the holder of an Australian Financial Services Licence (AFSL). You are registered for GST in your capacity as trustee of the Superannuation Fund, which is a financial product in which clients invest indirectly in underlying securities and investments. You have appointed Entity Y as the Administrator of the Superannuation Fund. Advisers enter into a contract with the client to provide Services to the clients for a fee in respect of financial products you provide. Liability to pay for the Services rests with the clients at all times. Payment for the Services is paid out of the clients superannuation account funds pursuant to contractual arrangements you enter into with the clients. You are registered for GST and exceed the financial acquisition threshold. You have provided a number of documents in your ruling request that set out the framework within which each of the parties operates under the arrangement.

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 70-5 | A New Tax System (Goods and Services Tax) Regulations 2019 section 70-5.09

Reasons for decision: Summary: No, the fee is not consideration for a supply by the adviser to you for the purposes of section 11-5 of the GST Act. As such a response to question 2 is not necessary. | Detailed Reasoning - Detailed reasoning: The term 'taxable supply' is defined under section 9-5 of the GST Act to mean: You make a taxable supply if: (a) you make the supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with the indirect tax zone; and (d) you are registered or required to be registered for GST. However, a supply is not taxable to the extent it is GST-free or input taxed. Supply is defined in section 9-10 of the GST Act as any form of supply whatsoever, and includes a supply of services, provision of advice or information, a financial supply, an entry into, or a release from an obligation to do anything or refrain from an act, or to tolerate a situation or act. Similarly, an acquisition is any form of acquisition whatsoever, with the definition under section 11-10 of the GST Act including things that correspond with those things included in the broad definition of supply. As such, for every supply there is a recipient and an acquisition (see Proposition 2 in GSTR 2006/9 Goods and Services Tax: supplies (GSTR 2006/9) at paragraph 53). You will be entitled to input tax credits for any creditable acquisitions it makes under section 11-5 of the GST Act. Section 11-5 states: You make a creditable acquisition if: (a) you acquire anything solely or partly for a creditable purpose; and (b) the supply of the thing to you is a taxable supply; and (c) you provide, or are liable to provide, consideration for the supply; and (d) you are registered or required to be registered for GST. [denotes a term defined in section 195-1 of the GST Act.] Section 195-1 of the GST Act provides that the meaning of creditable purpose is given by section 11-15 of the GST Act, which states: | Detailed Reasoning - 11-15 Meaning of creditable purpose: (1) You acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise. (2) However, you do not acquire the thing for a creditable purpose to the extent that: (a) the acquisition relates to making supplies that would be input taxed; or (b) the acquisition is of a private or domestic nature. An entity can only make a creditable acquisition, as defined under section 11-5 of the GST Act, if there is a corresponding supply made to it which is a taxable supply, and a supply can only be taxable under section 9-5 of the GST Act if the supply is made 'for consideration'. Consideration is defined under section 9-15 of the GST Act to include any payment 'in connection with' a supply, or a payment 'in response to or for the inducement' of a supply (even if the payment is provided by a third party). GSTR 2006/9 states: 222. Where the parties to a transaction have reduced their understanding of the transaction to writing, that documentation is the logical starting point in determining the supplies that have been made. An examination of any relevant documentation and the surrounding circumstances, which together form the total fact situation, is also important in determining whether the documentation captures the nature of a transaction for GST purposes. In this case you are not acquiring the supply of Services made by advisers. The supply of Services by the advisers is made to your client, not to you. The liability to pay for the Services rests with your client, not with you. The consideration for those supplies is not consideration for any supply to you. As such, the payment of the fee is not consideration for a supply by the adviser to you for the purposes of section 11-5 of the GST Act.