ATO Interpretative Decision

ATO ID 2007/32

Goods and Services Tax

• 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ATO ID contains references to provisions of the A New Tax System (Goods and Services Tax) Regulations 1999, which have been replaced by the A New Tax System (Goods and Services Tax) Regulations 2019.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.

  With effect from 1 July 2015, the term 'Australia' is replaced in nearly all instances within the GST, Luxury Car Tax and Wine Equalisation Tax legislation with the term 'indirect tax zone' by the Treasury Legislation Amendment (Repeal Day) Act 2015. The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts. For readability and other reasons, where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act.

Issue

Is an entity, an Australian authorised deposit-taking institution (ADI), making a financial supply under subregulation 40-5.09(4) of the A New Tax System (Goods and Services Tax) Regulations 1999 (the GST Regulations) when it provides transaction information, for not more than $1,000, to a client who is not an account holder with the entity and the information relates to the client's own transaction.

Decision

Yes, the entity is making a financial supply under subregulation 40-5.09(4) of the GST Regulations when it provides transaction information, for not more than $1,000, to a client who is not an account holder and the information relates to the client's own transaction.

Facts

The entity is an Australian ADI that carries on a banking business within the meaning of the Banking Act 1959.

The entity provides transaction information to clients, some of whom do not hold accounts with the entity.

The applicable fee for each request does not exceed $1,000.

The entity is registered for GST.

Reasons for Decision

Under subsection 40-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), a financial supply is input taxed. Subsection 40-5(2) of the GST Act provides that a financial supply has the meaning given by the GST Regulations.

Subregulation 40-5.09(1) of the GST Regulations states that the provision, acquisition or disposal of an interest mentioned in subregulation 40-5.09(3) or 40-5.09(4) of the GST Regulations is a financial supply if:

(a)

the provision, acquisition or disposal is:

•

for consideration

•

in the course or furtherance of an enterprise

•

connected with Australia, and

(b)

the supplier is:

•

registered or required to be registered for GST, and

•

a financial supply provider in relation to the supply of the interest.

Item 1 in the table in subregulation 40-5.09(3) of the GST Regulations lists, as a financial supply, an interest in or under an account made available by an Australian ADI in the course of:

•

its banking business within the meaning of the Banking Act, or

•

its State banking business.

In regard to a client that is an account holder, the entity makes a supply of an interest in an account which is a financial supply.

Regulation 40-5.11 of the GST Regulations states:

Something mentioned in a Part of Schedule 7 that relates to a financial supply mentioned in an item in the table in regulation 40-5.09 . . . is an example of the financial supply mentioned in the item . . .

Note 1: The examples are not to be taken as exhaustive.

Note 2: If an example in Schedule 7 is inconsistent with the description in this Division of the financial supply to which the example relates, the description prevails. . .

Note 3: Something that is within the scope of an item in the table in regulation 40-5.09 will be a financial supply described in that item even if it is not mentioned as an example of the item . . .

Part 1 of Schedule 7 to the GST Regulations provides examples of services and products which relate to the supply of an interest in an account made available by an Australian ADI. It follows that each of the services or products mentioned in Part 1 of Schedule 7 is an example of a financial supply - being the supply of an interest in an account under item 1 in the table in subregulation 40-5.09(3) of the GST Regulations.

The following listed examples have a similar context to the provision of transaction information, in the way that they relate to the supply of an account by an Australian ADI:

Example 8 - notification of dishonoured transactions and unpaid fees

Example 13 - making information about accounts available.

The provision of transaction information is consistent with these examples. It is within the scope of a type of product or service relating to the supply of an account by an Australian ADI.

It follows that the provision of transaction information for consideration, to a client who is an account holder, would be a financial supply under item 1 in the table in subregulation 40-5.09(3) of the GST Regulations when the information relates to a transaction on the client's account.

A financial supply to non-account holders

Subregulation 40-5.09(4) of the GST Regulations states that a supply (to which item 1 in the table to subregulation 40-5.09(3) of the GST Regulations does not apply) by an Australian ADI for a fee of not more than $1,000 is a financial supply if:

•

the item would have applied to that supply in relation to an account with the ADI, or

•

the fee relates to an application to the ADI that, if accepted, would result in the creation of an account by the ADI.

Examples of financial supplies mentioned in subregulation 40-5.09(4) of the GST Regulations are:

1.

Electronic transfer to another Australian ADI for a person who does not hold an account with the ADI

2.

A loan application fee.

Further explanation and guidance to the interpretation of subregulation 40-5.09(4) of the GST Regulations is found in the Explanatory Statement to the A New Tax System (Goods and Services Tax) Amendment Regulations 2000 (No.2) (the Explanatory Statement). The Explanatory Statement with regard to subregulation 40-5.09(4) states:

...that where an Australian ADI provides a service and charges a fee of $1,000 or less the supply will be treated as a financial supply if it would have been a financial supply if provided to an account holder. This will make it unnecessary for the provider of the service to determine whether the supply is being made to an account holder or non-account holder. In both cases the supply would be input taxed...However, supplies not made in connection with an account that would be a taxable supply will not become financial supplies even if a fee less than $1,000 is charged.

The provision intends for an Australian ADI to treat supplies, for a fee of not more than $1,000, as financial supplies if they are provided to non-account holders and those supplies would have otherwise been financial supplies under item 1 in the table in subregulation 40-5.09(3) of the GST Regulations if made to account holders.

A supply of transaction information to a client, where the information relates to a client transaction, will be a financial supply under subregulation 40-5.09(4) of the GST Regulations when made to a recipient who does not hold an account and the fee charged is not more than $1,000. This is because it would have been a supply under subregulation 40-5.09(3) of the GST Regulations if the client held an account.

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

Related ATO Interpretative Decisions
ATO ID 2007/33

Other References:
Explanatory Statement to the A New Tax System (Goods and Services Tax) Amendment Regulations 2000 (No.2)

Keywords
Accounts
Goods and services tax
GST financial supplies
GST regulations
GST supply
Input taxed supplies

Siebel/TDMS Reference Number:  5448768

Business Line:  Indirect Tax

Date of publication:  16 February 2007

ISSN: 1445-2782