Private ruling: GST and claiming input tax credits
Date of advice: 14 July 2020
Published: September 2020
Ruling period: 1 July 2020 till quarter ending 30 June 2022
Date scheme commenced: 1 July 2020

Ruling: Q1: Is Entity A entitled to an input tax credit in respect of the Payments made to Entity B in accordance with the terms of the Deed? | A1: No, as the payments are not consideration for a supply there is no entitlement to an input tax credit.

Relevant facts and circumstances: · Entity A carries on an enterprise in Australia and is registered for GST. · Entity A is in the process of a restructure of its business which involves going from being a wholesaler of its product to a retailer of that product to Australian consumers. As such, Entity B, being a current retailer, is no longer required. · Entity A has notified Entity B that it is seeking to terminate a contract (Agreement) that currently applies in respect of the distribution of product and has notified Entity B of its intention to terminate its Agreement. · Pursuant to the terms of a Deed between Entity A and Entity B, Entity A makes a payment (Payment) to Entity B

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 11-5 | A New Tax System (Goods and Services Tax) Act 1999 11-5(b)