- Fair and reasonable principles of apportionment
- Decision-making methodology
- Examples of decision-making methodology
- Reviewing and documenting decisions
Where a business makes a mixture of input taxed and other supplies, which is commonplace in the financial services sector, it will need to determine the extent to which acquisitions (and therefore the associated GST incurred) relate to the making of supplies that are input taxed. This is more commonly referred to as apportionment.
This will normally mean that you need to design and apply a methodology to identify, capture and report GST on acquisitions that do not relate to input taxed supplies. This is because this GST can be claimed on the BAS as an input tax credit, subject to all the other normal rules for claiming GST credits.
These general rules about input tax are supplemented by four exceptions where you can claim a GST credit for a purchase you use to make your financial supply.
For more detailed information on apportionment, see:
- GSTR 2006/3 Goods and services tax: determining the extent of creditable purpose for providers of financial supplies
- GSTR 2002/2 Goods and services tax: GST treatment of financial supplies and related supplies and acquisitions
- GSTR 2008/1 Goods and services tax: when do you acquire anything or import goods solely or partly for a creditable purpose?
- GSTR 2006/4 Goods and services tax: determining the extent of creditable purpose for claiming input tax credits and for making adjustments for changes in extent of creditable purpose
- GSTR 2003/9 Goods and services tax: financial acquisitions threshold
- GSTR 2004/1 Goods and services tax: reduced credit acquisitions.