Goods and Services Tax Ruling

GSTR 2002/2A3 - Addendum

Goods and services tax: GST treatment of financial supplies and related supplies and acquisitions

Addendum

This Addendum amends Goods and Services Tax Ruling GSTR 2002/2 to:

·
make the explanation contained in this Ruling consistent with paragraphs 149 to 171 of GSTR 2008/1: Goods and services tax: when do you acquire anything or import goods solely or partly for a creditable purpose?
·
update the date of effect clause.

GSTR 2002/2 is amended as follows:

1. Paragraph 6

Omit the paragraph including the notes; substitute:


6. This Ruling explains the Commissioner's view of the law as it applies both before and after its date of issue. You can rely on this Ruling on and from its date of issue for the purposes of section 105-60 of Schedule 1 to the Taxation Administration Act 1953 (TAA). Goods and Services Tax Ruling GSTR 1999/1 explains the GST rulings system and the Commissioner's view of when you can rely on this interpretation of the law in GST public and private rulings.

6A. Changes made to this Ruling by Addenda that issued on 25 February 2004, 15 August 2007 and 5 March 2008 have been incorporated into this version of the Ruling.[F1A] You can rely on the changes made to the Ruling by each Addendum for the purposes of section 105-60 of Schedule 1 to the TAA from the date of issue of the relevant Addendum. If the Addendum conflicts with a previous private ruling that you have obtained or a previous public ruling, the Addendum prevails.

6B. If you have relied on a previous ruling (including the public ruling that the Addendum amends), you are protected in respect of what you have done up to the date of issue of the relevant Addendum or, if there is a change to the legislation, you are protected in respect of what you have done up to the date the legislative change takes effect. This means that if you have relied on the previous ruling and have underpaid an amount of GST, you are not liable for the shortfall prior to either the issue date of the relevant Addendum or the date the legislative change takes effect, as appropriate. Similarly, if you have relied on the previous ruling you are not liable to repay an amount overpaid by the Commissioner as a refund.

2. Paragraph 259

Omit the words 'not merely contemplated supplies where there is no current intention to make a particular supply'.

3. Paragraph 266

Omit the words 'it has formed the intention to make'; substitute 'there is a relationship between a reduced credit acquisition and the making of'.

4. Paragraph 268

(a) Omit the heading; substitute:


Example 39: Acquisitions leading up to making a financial supply

(b) Omit the second sentence.

5. Paragraph 269

Omit the paragraph; substitute:


269. Although the acquisition of the controlling interest takes nine months to complete, Future Corporation is entitled to claim a reduced input tax credit for each preceding month's supply of services by Present Ltd (being the arrangement by a financial supply facilitator of the acquisition of an interest in a security) as each invoice issues. This is because the acquisition of the services relates to a financial supply that Future Corporation is in the process of making.

6. Paragraph 270

(a) Omit the heading; substitute:


Example 40: Acquisitions leading up to the making of a financial supply where the transaction is not completed

(b) Omit the last sentence.

7. Paragraph 272

Omit the heading; substitute:


Example 41: Success fee - single payment for services that partly relate to making a financial supply

8. Paragraph 274

Omit the paragraph; substitute:


274. The services rendered prior to the activities of arranging the acquisition of the shares of Rochester Enterprises need to be apportioned in light of the type of due diligence advice provided by Eagle Corp. To the extent that the due diligence conducted relates to an option that, if adopted, would lead to the making of input taxed supplies, the acquisition of the advice would not be creditable. Conversely to the extent that advice relates to an option that, if adopted, would lead to the making of taxable supplies, the acquisition of the advice would be creditable. The services of arranging for the acquisition of the shares in Rochester are not for a creditable purpose as they relate to making supplies that would be input taxed. Belvedere Ltd may be entitled to a reduced input tax credit under item 9 of subregulation 70-5.02(2) in respect of the services acquired concerning the arrangement of the acquisitions of shares in Rochester Enterprises. (Whether Belvedere Ltd is entitled to reduced input tax credits for the acquisition depends on the other requirements of Division 70 being met and whether, in substance and reality, the services acquired come within item 9.)

9. Detailed contents list

Omit:

Example 39: Intention to make a financial supply 268
Example 40: Intention to make a financial supply where the transaction is not completed 270
Example 41: Success fee - single payment for services spanning the formation of intention to make a financial supply 272

Substitute:

Example 39: Acquisitions leading up to making a financial supply 268
Example 40: Acquisitions leading up to the making of a financial supply where the transaction is not completed 270
Example 41: Success fee - single payment for services that partly relate to making a financial supply 272

10. Related Rulings

Insert:


GSTR 2008/1

11. Legislative references

Omit:


- TAA 1953 37

Substitute:


- TAA 1953 Sch 1 105-60

This Addendum explains our view of the law as it applies from the date of issue of this Addendum. You can rely upon this Addendum on and from its date of issue for the purpose of section 105-60 of Schedule 1 to the Taxation Administration Act 1953. If this Addendum conflicts with a previous private ruling that you have obtained or a previous public ruling, this Addendum prevails. However, if you have relied on a previous ruling (including the public ruling that the Addendum amends), you are protected in respect of what you have done up to the date of issue of this Addendum or, if there is a change to the legislation, you are protected in respect of what you have done up to the date the legislative change takes effect. This means that if you have relied on the earlier ruling and have underpaid an amount of GST, you are not liable for the shortfall prior to either the issue date of this Addendum or the date the legislative change takes effect, as appropriate. Similarly, if you have relied on the earlier ruling you are not liable to repay an amount overpaid by the Commissioner as a refund.

Commissioner of Taxation
5 March 2008

Footnotes


1A Refer to each Addendum to see how that Addendum amends this Ruling.

References

ATO references:
NO 2006/20258

ISSN: 1443-5160