8.5. If you are a supplier (assignor) and you assign a debt to a debt factor, whether on a recourse or non-recourse basis, what is the consideration for the assignment?
Non-interpretative – other references (see paragraph 90 of GSTR 2004/4External Link - Goods and services tax: assignment of payment streams including under a typical securitisation arrangement)
The consideration is the price for which you sell the debt to the debt factor. The consideration is not the difference between the face value of the debt and the amount the debt factor pays you for the debt.
Example – consideration for assigning a debt under a debt factoring arrangement
A makes a taxable supply of goods to B for $110. A then sells the debt (owed to him by B in relation to the taxable supply) to a debt factor for $95.
The consideration for the assignment of the debt is $95. The consideration is not $15 (being the difference between the face value of the original debt and the $95).
End of example