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Ruling
Subject: GST and water saving rebates
Question 1
Is your payment of the specified rebates consideration for a creditable acquisition?
Answer
No
This ruling applies for the following periods:
The scheme commences on:
Relevant facts and circumstances
You are registered for GST.
Your primary responsibility is to provide water to various entities.
You offer payments to consumers who implement water saving strategies.
The rebate is generally calculated as a percentage of the cost to install the item.
Where a consumer thinks they are entitled to a rebate, they will apply to you for a rebate of a portion of the cost of the supply to them from the supplier.
Examples of the situations where rebates can apply include where an entity:
· Changes from top loading to front loading commercial washing machines
· Changes connections from town water to tank water or
· Connects toilets to existing rain water tanks.
Relevant legislative provisions
Section 9-5 A New Tax System (Goods and Services Tax) Act 1999
Section 11-5 A New Tax System (Goods and Services Tax) Act 1999
Reasons for decision
You make a creditable acquisition if you satisfy the requirements of section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
That is:
1. you acquire the thing for a creditable purpose
2. you are the recipient of a taxable supply
3. you provide or are liable to provide consideration for the supply, and
4. you are registered for GST.
The key issue here is whether your payment of the subsidy is consideration for a supply made by the consumer to you under this scheme.
Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9) examines the meaning of 'supply' in the (GST Act).
Paragraphs 272 and 272 of GSTR 2006/9 explain that a reimbursement is not consideration for a supply.
In your situation, the consumer has already paid for the conversion or installation. The consumer, if eligible, will receive the input tax credit for that acquisition. The consumer does not make any undertaking or other supply to you in return for the reimbursements. They merely accept your unilateral standing offer for reimbursement.
As the consumer has not made any supplies to you, you have not made a creditable acquisition in connection with your reimbursement payment.