Private ruling: GST and apportionment methodology
Date of advice: 4 December 2020
Published: January 2021

Ruling: Q1: Does your revenue apportionment methodology provide a fair and reasonable basis for allocating acquisitions that can be attributed to both creditable and non-creditable purposes in order to determine how much GST can be recovered? | A1: Yes. The Commissioner considers it fair and reasonable that you use your revenue apportionment methodology for allocating acquisitions that can be attributed to both creditable and non-creditable purposes in order to determine how much GST can be recovered. | Q2: Is your methodology for determining that the financial acquisitions threshold ("FAT") was exceeded during the periods in question fair and reasonable? | A2: Yes. | Q3: Is the methodology used to determine that the FAT was not exceeded for the periods in question fair and reasonable? | A3: Yes. | Q4: As a result of the above use of the revenue apportionment methodology, are you entitled to claim further input tax credits for the relevant periods? | A4: Yes.

Relevant facts and circumstances: You are registered for goods and services tax (GST) and were registered throughout the relevant period to which this submission relates.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999. Section 9-5, subsection 11-15(2)(a), Section11-15(4), Division 189 | A New Tax System (Goods and Services Tax) GST Regulations 2019 . Section 196-1.01, Section 70-5.02, Section 70-5.03.

Reasons for decision: Summary: You submit that: The revenue apportionment methodology provides a fair and reasonable basis for allocating indirect financial acquisitions to determine the proportion that relates to making financial supplies. You submit that this method is appropriate both for the purpose of the FAT calculation but also for the purpose of determining the amount of input tax credits claimable. You are entitled to claim further input tax credits for the relevant period. To complete the quantification of the further input tax credits entitlement, you completed the following steps: • Step 1 - For the purpose of the FAT, determine which expenses are direct financial acquisitions and indirect financial acquisitions. • Step 2 - Determine an appropriate apportionment method to calculate the proportion of indirect financial acquisitions that relates to making financial supplies. • Step 3 - Complete the FAT analysis. • Step 4 - Quantify the GST adjustment. | Detailed Reasoning - Revenue Apportionment Methodology: The Commissioner considers the revenue apportionment methodology to be a fair and reasonable apportionment methodology in line with the requirements set out in GSTR 2006/3.