GST and financial supplies - claiming reduced GST credits

Can you claim GST credits?

While you generally cannot claim GST credits on purchases you use to make financial supplies, you may be able to claim them if you do not exceed the financial acquisitions threshold.

If you exceed the financial acquisitions threshold you can still generally claim reduced GST credits if your purchase is a reduced credit acquisition.

For more information on other exceptions to the general rule about claiming GST credits for purchases you use to make financial supplies, refer to GST and financial supplies - completing your activity statement (NAT 10816).

Financial acquisitions threshold

There are two tests you can use to see if you exceed the financial acquisitions threshold. You may exceed the threshold under either test.

Both tests are based on financial acquisitions you make. A financial acquisition is a purchase that you use for making a financial supply (other than a financial supply, which is a borrowing).

Both tests take into account financial acquisitions made over 12 month periods:

• current financial acquisitions mean financial acquisitions you make over the whole of the current month plus the preceding 11 months
• future financial acquisitions mean financial acquisitions you make over the whole of the current month plus the following 11 months (you must estimate this amount).

To test whether you exceed the financial acquisitions threshold in a particular month, you must assume that the financial acquisitions you have made, or are likely to make, are not used for either of the following:

• to make input taxed sales
• partly for a private or domestic purpose.

You exceed the financial acquisitions threshold for a particular month if either of the following occur:

• the GST credits you could claim for current or future financial acquisitions exceed $50,000 (before 1 July 2012) or $150,000 (on or after 1 July 2012) in the relevant 12 month period
• the amount of GST credits you could claim for current or future financial acquisitions is more than 10% of the total amount of GST credits you could claim for all your purchases (including financial acquisitions) during the relevant 12 month period.

For more information, refer to the new legislation Tax Laws Amendment (2011 Measures No. 9) Act 2012 For more information about how to work out whether you exceed the financial acquisitions threshold, refer to Item 7 of Financial services - questions and answers (NAT 5405).