ATO Interpretative Decision
ATO ID 2001/678 (Withdrawn)
Goods and Services Tax
GST and share brokerage servicesFOI status: may be released
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This ATO ID is a straight application of the law and does not contain an interpretative decision.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 stockbroker, making a financial supply that is input taxed under subsection 40-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies brokerage services?
Decision
No, the entity is not making a financial supply that is input taxed under subsection 40-5(1) of the GST Act when it supplies brokerage services. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a stockbroker. The entity is supplying brokerage services. The services are performed in Australia for an Australian client.
The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
Under subsection 40-5(1) of the GST Act, a financial supply is input taxed. Financial supply is defined in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).
Subregulation 40-5.09(1) of the GST Regulations provides that in certain circumstances, the provision, acquisition or disposal of an interest listed in subregulation 40-5.09(3) or (4) of the GST Regulations, is a financial supply.
Item 10 in the table in subregulation 40-5.09(3) of the GST Regulations (Item 10) lists securities. However, in this case, the entity is not supplying shares but rather is supplying the share brokerage services. As such, the supply is not covered by Item 10. In addition, the supply is not covered by any other item in the table in subregulation 40-5.09(3) of the GST Regulations, or by subregulation 40-5.09(4) of the GST Regulations.
Furthermore, regulation 40-5.12 of the GST Regulations lists those things which are not financial supplies. Broking services are specified at item 11 in the table in regulation 40-5.12 of the GST Regulations.
Therefore, as the supply of brokerage services is not a financial supply under subregulation 40-5.09(1) of the GST Regulations, the supply is not input taxed under subsection 40-5(1) of the GST Act.
The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under any of the other provisions in Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies brokerage services.
Date of decision: 19 March 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
Division 40
subsection 40-5(1)
regulation 40-5.09
subregulation 40-5.09(1)
subregulation 40-5.09(3)
subregulation 40-5.09(3) table item 10
subregulation 40-5.09(4)
regulation 40-5.12
regulation 40-5.12 table item 11 Related ATO Interpretative Decisions
ATO ID 2001/448
ATO ID 2001/444
Keywords
Goods & services tax
GST supplies & acquisitions
Taxable supply
Input taxed supplies
GST financial supplies
ISSN: 1445-2782
| Date: | Version: | |
| 19 March 2001 | Original statement | |
| You are here | 23 September 2005 | Archived |