ATO Interpretative Decision

ATO ID 2004/820

Goods and Services Tax

GST and EFTPOS facilities used by two businesses
FOI status: may be released

This ATO ID contains references to provisions of the A New Tax System (Goods and Services Tax) Regulations 1999, which have been replaced by the A New Tax System (Goods and Services Tax) Regulations 2019. This ATO ID continues to apply in relation to the remade Regulations.
A comparison table which provides the replacement provisions in the A New Tax System (Goods and Services Tax) Regulations 2019 for regulations which are referenced in this ATO ID is available.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 service provider, making 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 allows another business to use its EFTPOS facilities for a fee?

Decision

No, the entity is not making an input taxed supply under subsection 40-5(1) of the GST Act when it allows another business to use its EFTPOS facilities for a fee.

The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a service provider. The entity subleases part of its business premises to another business. The entity allows the other business to use its EFTPOS facilities. The entity charges this business a fee for each transaction processed using EFTPOS.

The entity is registered for goods and services tax (GST) and the supply satisfies the other positive limbs of section 9-5 of the GST Act.

Reasons for Decision

Section 9-5 of the GST Act provides that a supply is not a taxable supply to the extent that it is input taxed. By allowing the other business to use its EFTPOS facilities, the entity is making a supply of services. However, there is a question as to whether this supply is also a financial supply.

Under subsection 40-5(1) of the GST Act, a financial supply is input taxed. Subsection 40-5(2) of the GST Act defines a financial supply as having 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 40-5.09(4) of the GST Regulations, is a financial supply.

The entity subleases part of its business premises to another business and allows the other business to use its EFTPOS facilities.

The actual EFTPOS transaction between the bank and the customer is a financial supply under item 1 in the table in subregulation 40-5.09(3) of the GST Regulations. However, in allowing the other business to use its EFTPOS facilities, the entity does not provide, acquire or dispose of an interest in or under any of the items listed in subregulation 40-5.09(3) or 40-5.09(4) of the GST Regulations. Therefore, the entity is not making an input taxed supply under subsection 40-5(1) of the GST Act.

The entity is registered for GST and the supply of services 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 provision of Division 40 of the GST Act. Therefore, the entity is making a taxable supply of services under section 9-5 of the GST Act when it allows another business to use its EFTPOS facilities for a fee.

Date of decision: 9 July 2002

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
   subregulation 40-5.09(1)
   subregulation 40-5.09(3)
   subregulation 40-5.09(3) table item 1
   subregulation 40-5.09(4)

ATO Interpretative Decisions overturned by this decision
ATO ID 2004/324

Keywords
Goods and services tax
Input taxed supplies
GST financial supplies
GST non financial supplies
GST supplies & acquisitions
Taxable supply

Siebel/TDMS Reference Number: 4262762

Business Line: Indirect Tax

Date of publication: 15 October 2004

ISSN: 1445-2782

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