ATO Interpretative Decision
ATO ID 2001/791 (Withdrawn)
Goods and Services Tax
GST and entitlement to an input tax credit for a payment of compulsory third party motor vehicle insurance made prior to 1 July 2003FOI status: may be released
-
This ATO ID is withdrawn on the basis that a precedential view exists. The ATO view for this issue is covered in the Motor Vehicle Industry Partnership Register - Compulsory third party-Issue 4.c.(i) Is an entity entitled to claim an input tax credit for compulsory third party insurance premiums paid before 1 July 2003?This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a motor vehicle dealer, entitled to an input tax credit under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it pays compulsory third party motor vehicle insurance prior to 1 July 2003 and paragraph 23(1)(a) of the A New Tax System (Goods and Services Tax Transition) Act 1999 (Transition Act) applies?
Decision
No, the entity is not entitled to an input tax credit under section 11-20 of the GST Act when it pays compulsory third party motor vehicle insurance prior to 1 July 2003 and paragraph 23(1)(a) of the Transition Act applies.
Facts
The entity is a motor vehicle dealer. The entity acquires compulsory third party motor vehicle insurance solely for a creditable purpose. The supply of compulsory third party motor vehicle insurance to the entity is a taxable supply under section 9-5 of the GST Act.
The entity pays for the compulsory third party motor vehicle insurance prior to 1 July 2003, together with the registration fee for the vehicle. The compulsory third party motor vehicle insurance scheme is a statutory compensation scheme that is specified in the A New Tax System (Goods and Services Tax Transition) Regulations 2000 (Transition Regulations).
The entity is registered for goods and services tax (GST).
Reasons for Decision
Section 11-20 of the GST Act provides that an entity is entitled to an input tax credit for any creditable acquisition that it makes.
Under section 11-5 of the GST Act, an entity makes a creditable acquisition if:
- •
- the entity acquires anything solely or partly for a creditable purpose;
- •
- the supply of the thing to the entity is a taxable supply;
- •
- the entity provides or is liable to provide consideration for the supply; and
- •
- the entity is registered or required to be registered.
In this case, the payment of the compulsory third party motor vehicle insurance satisfies the requirements under section 11-5 of the GST Act. As such, the entity would normally be entitled to an input tax credit, under section 11-20 of the GST Act, for the payment of compulsory third party motor vehicle insurance.
However, under paragraph 23(1)(a) of the Transition Act, no input tax credit can be claimed for a premium, contribution, or similar payment made under, or a levy paid in connection with a compulsory third party scheme before 1 July 2003.
Paragraph 23(2)(a) of the Transition Act defines a compulsory third party scheme to include a statutory compensation scheme that is specified or is of a kind specified in the Transition Regulations.
In this case, payment of the compulsory third party motor vehicle insurance was made in connection with a compulsory third party scheme that is a statutory compensation scheme specified in the Transition Regulations.
Therefore, paragraph 23(1)(a) of the Transition Act applies and the entity is not entitled to an input tax credit under section 11-20 of the GST Act when it pays compulsory third party motor vehicle insurance prior to 1 July 2003.
Date of decision: 17 September 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
section 11-5
section 11-20
paragraph 23(1)(a)
paragraph 23(2)(b) A New Tax System (Goods and Services Tax Transition) Regulations 2000
the Regulations Related ATO Interpretative Decisions
ATO ID 2001/792
Other References:
NAT 3427- Insurance and GST - Fact Sheet
Keywords
Goods & services tax
GST insurance
Third parties
GST supplies & acquisitions
Creditable purpose
GST regulations
GST transitional issues
Special transitional rules
ISSN: 1445-2782
| Date: | Version: | |
| 17 September 2001 | Original statement | |
| You are here | 23 December 2005 | Archived |