A New Tax System (Goods and Services Tax) Regulations 2019

Chapter 4 - The special rules  

Part 4-2 - Special rules mainly about supplies and acquisitions  

Division 70 - Financial supplies (reduced credit acquisitions)  

SECTION 70-5.02A   Acquisitions that attract reduced input tax credits: certain offshore supplies  

For the purposes of subsection 70-5(1) of the Act, an acquisition mentioned in subsection (3) of this section that relates to making financial supplies can give rise to an entitlement to a reduced input tax credit if:

(a) the supply or transfer that gives rise to the acquisition (the relevant supply ) consists of:

(i) the transfer of something to an enterprise in the indirect tax zone (a receiving enterprise ) from an enterprise outside the indirect tax zone (a supplying enterprise ); or

(ii) the doing of something for a receiving enterprise by a supplying enterprise; and

(b) the relevant supply is a taxable supply because of section 84-5 of the Act (including a supply that is not connected to the indirect tax zone because of section 84-15 of the Act); and

(c) the receiving enterprise and the supplying enterprise are closely related.

In determining the reduced credit acquisition, the price of the relevant supply is reduced by the amount passed on by the supplying enterprise to the receiving enterprise for any unabsorbed contribution.

The acquisitions are set out in the following table.

Reduced credit acquisitions - certain offshore supplies
Item Acquisition
Senior executive management
1 Provision of senior management services, including the following:
(a) corporate strategy and development;
(b) investment strategy and performance measurement functions;
(c) profit or business centre performance support
2 Provision of support systems associated with the provision of senior management services
Human resources support
3 Provision of human resources support services, including the following:
(a) general advice and planning;
(b) recruitment assistance;
(c) compensation advice and management;
(d) training
4 Processing and maintenance of employee data and files
Corporate marketing and communications
5 Provision of corporate information and communication services
6 Provision of marketing administration and media support services
Financial management
7 Performance of financial management service functions, including the following:
(a) tax law compliance;
(b) corporate treasury operations;
(c) financial control (including statutory reporting and accounting policy);
(d) general ledger account reporting functions, including paying and processing invoices and payment instructions;
(e) internal audit functions;
(f) management reporting systems;
(g) setting intrabank transfer pricing policy;
(h) corporate insurance;
(i) centralised payroll functions
Supply procurement and management
8 Process and management services for the procurement of supplies
Credit, operational and risk management
9 Establishment and application of credit policy
10 Development, establishment and application of policies, monitoring systems and procedures to manage market and operational risk
11 Development and application of security processes related to fraud prevention
Relationship management
12 Provision of supervision, monitoring and management services in support of client relationships
In-house legal services
13 Provision of legal services, including:
(a) company secretary functions; and
(b) regulatory and legal compliance
Technology systems
14 Provision of systems development and computer programming services
15 Maintenance and operation of transaction processing systems (including communications and applications systems)
16 Development and maintenance of disaster recovery systems
Business services
17 Provision of transport, security and mail services
18 Property management

However, something that is used in making a reduced credit acquisition is not, for that reason, a reduced credit acquisition.

Example 1:

Consultant ' s services used in the provision of recruitment services.

Example 2:

Labour hire services used in the provision of security services.

The performance by a third party, on behalf of the supplying enterprise or a closely related enterprise of the supplying enterprise, of all or part of the relevant supply is an unabsorbed contribution if:

(a) the amount paid or payable, or part of the amount paid or payable, by the supplying enterprise for the performance is passed on by the supplying enterprise to the receiving enterprise as part of the price of the relevant supply; and

(b) the enterprise carried on by the third party is not closely related to the supplying enterprise; and

(c) the thing that is involved in the performance by the third party retains, at the time of the relevant supply, the substance and character that it had when first purchased, for the purposes of the relevant supply, by the supplying enterprise or an entity that carries on an enterprise that is closely related to the supplying enterprise.


For paragraph (c), legal advice that is given in the following circumstances is an unabsorbed contribution:

  • (a) the advice is acquired by the supplying enterprise from a third party service provider as part of the provision of in-house legal services by the supplying enterprise to its 100% subsidiary in the indirect tax zone;
  • (b) the external legal service provider is not closely related to the supplying enterprise;
  • (c) the advice is passed on to the 100% subsidiary in the indirect tax zone by the supplying enterprise;
  • (d) the amount paid or payable for the advice is passed on to the 100% subsidiary in the indirect tax zone as part of the price that the supplying enterprise charges for the provision of in-house legal services.

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