Non-Profit News Service No. 0249 - Addendum to GSTR 2006/9 Goods and services tax: supplies
Non-Profit News Service No. 0249 - Addendum to GSTR 2006/9 Goods and services tax: supplies
On 1 July 2009, we released an addendum to Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies.
GSTR 2006/9 discusses the meaning of 'supply' and a number of propositions in relation to the concept of supply.
For non-profit organisations, the addendum (Goods and Services Tax Ruling GSTR 2006/9A2 - Addendum) further clarifies and gives examples of the existing Tax Office view on multiparty arrangements - specifically, Proposition 14 (third party payment arrangements) - including subsidy arrangements.
The addendum also:
Broadly, the addendum clarifies:
- that GST multiparty arrangements can only be determined by referring to the facts of the situation and the agreements entered into, and does not result in all multiparty arrangements being creditable
- you may not be able to claim GST credits in relation to some arrangements - for example, where you pay for a supply made to another party
- you may be able to claim GST credits where you contract with the supplier, including where your contract is for the supplier to reduce the price that is charged to another party.
The clarification on third party payments in GSTR 2006/9:
- does not constitute a change in the Tax Office view
- cannot address all third party payer versus creditable acquisition situations
- may result in payments under tripartite arrangements that were previously characterised as third party consideration being reviewed
- may result in some payments being re-characterised as consideration for a creditable acquisition instead of third party consideration, thereby entitling the payer (the recipient of the supply) to GST credits.
The addendum clarifies that in order to work out if a supply is made:
- you must examine the facts and circumstances of each situation
- a landowner must do something or undertake some action so that they make a supply when ownership of their land becomes vested in, or is transferred to, a government authority by law
- a landowner does not make a supply if it takes no action to cause its legal interest to be transferred or surrendered to the authority.
Therefore, if a taxable supply is made by your client or landowner, the government authority may be entitled to a GST credit for the amount of GST applicable to the taxable supply.
The addendum also clarifies that 'parties to an arrangement may contemplate an entity making a supply of a particular kind but, as events transpire, a different supply may actually be made by the entity'.
This is in response to the High Court decision in Federal Commissioner of Taxation v. Reliance Carpet Co Pty Ltd [2008] HCA 22; 2008 ATC 20-028; 68 ATR 158, and to maintain consistency with GSTR 2009/3.
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Last Modified: Friday, 31 July 2009
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