Private ruling: reduced input tax credits
Published: January 2013

Ruling: Q1: Does the recovery of management costs by Entity B from Entity A represent consideration for an acquisition made by Entity A that falls wholly within item 32(b)(iii) of the table in subregulation 70-5.02(2) of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations),and thus solely give rise to a reduced input tax credit (RITC) of 75%? | A1: No, the recovery of management costs by Entity B from Entity A does not represent consideration for an acquisition made by Entity A that falls wholly within item 32(b)(iii) of the table in subregulation 70-5.02(2) of the GST Regulations, which solely gives rise to a RITC of 75%. Instead the acquisition by Entity A for which "management costs" are paid as consideration is a reduced credit acquisition that qualifies for a RITC at the rate of 55% to the extent it is covered by item 32 and a RITC at the rate of 75% to the extent it is covered by another item of the table in subregulation 70-5.02(2) of the GST Regulations.

Relevant facts and circumstances: In order to protect the privacy and commercial in-confidence components of this private binding ruling the following summary is provided. This ruling concerned GST and entitlement to reduced input tax credits in response to the application of item 32 of the table in subregulation 70-5.02(2). The Commissioner has ruled on the specific question.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 11-5. | A New Tax System (Goods and Services Tax) Act 1999 section 40-5. | A New Tax System (Goods and Services Tax) Act 1999 section 70-5. | A New Tax System (Goods and Services Tax) Regulations 1999 Subregulation 40-5.09(1) and (3) | A New Tax System (Goods and Services Tax) Regulations 1999 Subregulation 70-5.02(2)


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