Private ruling: Mergers and acquisitions
Date of advice: 21 September 2022
Published: December 2022
Ruling period: 1 July 20XX to 1 July 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to full input tax credits for acquisitions of advisor services you made in relation to the sale of your enterprise, by your shareholders? | A1: Yes, you are entitled to full input tax credits for the acquisitions relating to the sale of your enterprise where you are the recipient listed on the tax invoice. You are not entitled to the input tax credits in relation to the acquisition in question 3 of this ruling. | Q2: Are you entitled to full input tax credits for acquisitions of advisor services you made in relation to the sale of your enterprise, by your shareholders, where the invoices were issued to members of the GST group for which you are the GST group representative? | A2: No, you are not entitled to input tax credits for acquisitions made by members of your GST group as they were made prior to the formation of the group. | Q3: Are you entitled to full input tax credits for acquisitions that your shareholders made from their advisors? | A3: No, you are not entitled to input tax credits for acquisitions, made by your shareholders, as you are not the recipient of the supply and you have not made a creditable acquisition.

Relevant facts and circumstances: You are currently registered for GST and have been throughout the entire relevant period. You were the head of a tax consolidated group. You also formed a GST group with those entities in 20XX. You were acquired by the buyer by way of a trade sale; the trade sale was initiated in 20XX and was completed in 20XX. Your shares are now owned by the buyer. You did not acquire or sell any shares in relation to the trade sale. Furthermore, you do not make any financial supplies, or acquisitions, in the course of your activities. Throughout the trade sale, multiple advisors were engaged to provide various services related to the trade sale. All of the advisors that were engaged operate as Australian resident entities. Although you paid for all of the acquisitions, some of the tax invoices you received do not list you as the recipient - instead listing: • member entities of the GST group which you represent • your shareholders • names that you have previously traded under. Relevantly, you have requested that some of the invoices, issued to members of your GST group, be reissued with you as the recipient. The supplier agreed and reissued the invoices. In one letter of appointment that an advisor provided, they confirmed that they were acting for your shareholders, providing legal advice in relation their exit of their investment in you. The scope of work & cost estimate that same advisor issued lists a number of services provided to, or for the benefit of, your shareholders. On the invoices issued for those services, they list your shareholder as the recipient and you as the payer.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 7-1 | A New Tax System (Goods and Services Tax) Act 1999 Section 11-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 11-10 | A New Tax System (Goods and Services Tax) Act 1999 Section 11-15 | A New Tax System (Goods and Services Tax) Act 1999 Section 29-10 | A New Tax System (Goods and Services Tax) Act 1999 Section 29-70 | A New Tax System (Goods and Services Tax) Act 1999 Section 40-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 48-45 | A New Tax System (Goods and Services Tax) Act 1999 Section 48-57 | A New Tax System (Goods and Services Tax) Regulations 2019 Section 40-5.09 Question 1 | Subsection 7-1(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that, entitlements to input tax credits (ITCs) arise on creditable acquisitions and creditable importations. | Under section 11-5 of the GST Act, 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 | Given that you are registered for GST, and provided consideration for taxable supplies when making acquisitions, your entitlement to input tax credits will depend on whether you acquired the supplies for creditable purpose. | Subsection 11-15(1) specifies that you acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise. Under subsection 11-15(2) of the GST Act, you do not acquire a 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 | Per the facts, you have engaged numerous advisors to the benefit of your enterprise. For that reason, we consider your costs to be enterprise costs. As stated in the facts, you have not acquired or sold any shares. The sale of your shares is a separate supply, made by your shareholders. Your enterprise costs do not relate to making input taxed supplies, nor are they private or domestic in nature. | Subsection 29-10(1) of the GST Act provides that the input tax credit to which you are entitled for a creditable acquisition is attributable to: | (a) The tax period in which you provide any of the consideration for the acquisition; or | (b) If, before you provide any of the consideration, an invoice is issued relating to the acquisition-the tax period in which the invoice is issued. | However, under subsection 29-10(3) if you do not hold a tax invoice for an acquisition that you have made, you are unable to attribute an input tax credit for that acquisition until you do. | Amongst other requirements for a document to be considered a valid tax invoice, subparagraph 29-70(1)(c) of the GST Act provides that, if the total price of the supply or supplies is at least $1,000 or such higher amount as the regulations specify, or if the document was issued by the recipient-the recipient's identity or the recipient's ABN must be clearly ascertained. Paragraph 21 of Goods and Services Tax Ruling GSTR 2013/1 Goods and services tax: tax invoices (GSTR 2013/1) clarifies that information sufficient to identify the supplier or recipient includes, but is not limited to, the legal name of the entity or the registered business name. | An advisor has issued an invoice to you with the recipient listed as a name you have previously traded under. Although you have since changed your name, we note that you continue to be registered under the same ABN and, as a result, a list of names you have historically traded under is readily available. As the recipient of the invoice is a previous legal name of yours, it can be considered sufficient information to identify you as the recipient. | Question 2 | As in Question 1, you are entitled to input tax credits on any creditable acquisitions that you make. If you are a member of a GST group, this may also apply to acquisitions made by other members of the group. | Under subsection 48-45(1) of the GST Act, if an entity makes a creditable acquisition or creditable importation the input tax credit for which is attributable to a tax period during which the entity is a member of a GST group: (a) the representative member is entitled to the input tax credit on the acquisition or importation; and | (b) the entity making the acquisition or importation is not entitled to the input tax credit on the acquisition or importation (unless the entity is the representative member). | Additionally, subsection 48-57(1) of the GST act provides that a document issued for a supply is taken to be a valid tax invoice, provided the only information lacking is the identity of the recipient and it contains enough information to ascertain the GST group, representative member or a member entity where the representative member would be entitled to an ITC under section 48-45. | An advisor has issued a number of invoices (for trade sale related acquisitions) to an entity which is a member of the GST group that you represent. Similarly, another advisor has issued an invoice to that same entity for acquisitions relating to the trade sale. The first advisor has since reissued the invoices, listing you as the recipient. | At the time the invoices were initially issued, the recipient of the invoices was not a member of the GST group for which you were the representative member. | As the representative member for the group, you are not entitled to an input tax credit, for the acquisition a current member entity made from an advisor, where the invoices were not reissued, under section 48-45 of the GST Act as that entity was not a member of your GST group for the period to which the input tax credit is attributable. Furthermore, under section 48-57 of the GST Act, the documents you hold are not valid tax invoices which you may use to attribute the aforementioned input tax credit to a tax period for the aforementioned reason. Question 3 | As reasoned in Question 1, entitlements to input tax credits arise on creditable acquisitions and creditable importations. This treatment extends to creditable acquisitions & importations made through an agent. | Subsection 11-10(1) of the GST Act defines 'acquisition' to mean any form of acquisition whatsoever. Subsection 11-10(2) provides a number of examples as to what may be an acquisition, most relevantly: | (b) an acquisition of services; | (c) a receipt of advice or information | (h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g) | Whilst you were liable to, and did, pay for the advisor's services, that doesn't necessarily mean that you have made an acquisition of legal services. | Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9) discusses tripartite arrangements, particularly identifying a nexus between the supply and the consideration, and to whom the supply is made. | Per the letter of appointment that you provided, your shareholders engaged the advisor and the advisor confirmed that they were to act on behalf of your shareholders. Each work item listed in the scope of work and cost estimate prepared by the advisor appears to be supplied to your shareholders. Finally, the invoice issued in respect of the legal services provided, states that they were provided to your shareholders and paid by you. | Paragraph 183 of GSTR 2006/9 states that, if you provide or are liable to provide consideration, but are not the recipient of the supply, you are a 'third party payer'. As a third party payer you do not make a creditable acquisition in relation to your payment because the supply is not made to you as required by section 11-5 of the GST Act. Making a payment for a supply that is made to another entity is not sufficient to make you the recipient of that supply.