• Mergers and acquisitions – claiming input tax credits

    This GST guide explains how you, as an entity, can claim input tax credits for acquisitions associated with merger and acquisition (M&A) activity.

    We have published advice about input tax credit entitlements for acquisitions associated with M&A in public rulings. However, public feedback has highlighted that more practical guidance would assist with taxpayer compliance.

    This guide is designed primarily for tax managers and tax practitioners who have a working knowledge of GST.

    What we mean by M&A

    References to M&A in this guide include takeovers and mergers of companies, as well as the sale and purchase of business assets (including goodwill). M&A activity refers to any of the steps that lead up to an M&A transaction. This includes activities where the intended M&A transaction does not eventuate.

    M&A may consist of several different supplies for GST purposes. For example, in addition to the sale of shares or business assets, there may be supplies associated with corporate restructuring, capital raising, divestments or share buy-backs.

    Assumptions we have made

    For the purpose of this guide, it is assumed that apart from determining if the acquisition relates to input taxed supplies, all the other requirements for creditable purpose and claiming input tax credits are met. It is also assumed that the entity incurring the cost of the acquisition is the entity making the acquisition and the entity undertaking the M&A activity.

    This guide does not address reduced input tax credits for acquisitions that relate to making financial supplies, and, unless specifically mentioned, it does not address circumstances where GST-free financial supplies may occur.

      Last modified: 24 Jun 2015QC 24390