ATO Interpretative Decision

ATO ID 2002/29

Goods and Services Tax

GST and money transfer services
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 supplier of money transfer services, making a financial supply that is an input taxed supply under subsection 40-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it facilitates a money transfer for its Australian customer to an overseas beneficiary?

Decision

No, the entity is not making a financial supply that is an input taxed supply under subsection 40-5(1) of the GST Act when it facilitates a money transfer for its Australian customer to an overseas beneficiary. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a supplier of money transfer services. The entity facilitates the process of money transfer by collecting money from its customer in Australia, depositing money into its bank account, and directing its bank to transfer that money via telegraphic transfer, to an agent overseas. The agent then sends the money to a beneficiary overseas, based on information given by the entity.

The entity charges its Australian customer a fee for this service.

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. Subsection 40-5(2) of the GST Act provides that 'financial supply' has the meaning given by 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 9 in the table in subregulation 40-5.09(3) of the GST Regulations (Item 9) lists 'Australian currency, the currency of a foreign country, or an agreement to buy or sell currency of either kind'. However, a fee for the facilitation of the transfer of the money overseas is not covered by Item 9. 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.

Therefore, as the supply 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 other provisions in Division 40 of the GST Act. As such, the entity is making a taxable supply under section 9-5 of the GST Act when it facilitates a money transfer for its Australian customer to an overseas beneficiary.

Date of decision: 8 November 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   Division 40
   subsection 40-5(1)
   subsection 40-5(2)

A New Tax System (Goods and Services Tax) Regulations 1999
   regulation 40-5.09
   subregulation 40-5.09(1)
   subregulation 40-5.09(3)
   subregulation 40-5.09(3) table item 9
   subregulation 40-5.09(4)

Keywords
Goods & services tax
Input taxed supplies
GST non financial supplies

Business Line: GST

Date of publication: 24 January 2002

ISSN: 1445-2782

history

	Date:	Version:
You are here	8 November 2001	Original statement
	16 September 2002	Archived

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