8.6. If you are a supplier accounting for GST on a non-cash basis and you assign a debt to a debt factor, whether on a recourse or non-recourse basis, when do you account for the GST on the taxable supply to which the debt relates? How much GST should you account for?
For source of ATO view, refer to paragraphs 44 and 47 of GSTR 2004/4External Link - Goods and services tax: assignment of payment streams including under a typical securitisation arrangement
You account for the GST on the taxable supply under the normal attribution rules. That is, you attribute the GST for the taxable supply at the earlier of when you issued the invoice or when the recipient of the taxable supply makes any payment to you or to the debt factor.
The amount you must account for is 1/11th of the full face value of the invoice you issued for the taxable supply you made to the recipient. The GST for the taxable supply is not equal to 1/11th of the consideration for the supply of the debt to the debt factor.
A makes a taxable supply of goods to B for $110 and issues an invoice at the same time. A then sells the debt (owed to him by B in relation to the taxable supply) to a debt factor for $95. B later pays the debt factor only $99.
The GST payable for the taxable supply A made is $10. But for the factoring arrangement, A would ordinarily account for $10 GST at the earlier of when A issued the invoice to B or when A receives any of the $110. This outcome does not change because of the factoring arrangement. A accounts for $10 GST at the earlier of when B pays the debt factor $99 or when the invoice is issued.
The GST payable for the taxable supply A made is not 1/11th of the $95 payment received from the debt factor. This payment is consideration for a financial supply made by A (being the supply of the interest in the debt to the debt factor).
End of example