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Edited version of private advice
Authorisation Number: 1012630850114
Ruling
Subject: GST - reverse charging and reduced input tax credits
In order to protect the privacy and commercial in-confidence components of this private binding ruling the following summary is provided.
Question 1
Is an Australian company (AusCo) liable for goods and services tax (GST) under the reverse charge provision in Division 84 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) in relation to the management services supplied by a related non-resident company (NRCo) to AusCo?
Answer 1
Yes. AusCo is liable for GST under the reverse charge provision in Division 84 of the GST Act for the management services supplied by NRCo to AusCo.
Question 2
Is AusCo liable for GST under the reverse charge provision in Division 84 of the GST Act in relation to other charges paid or payable by a related overseas entity for services provided by third parties (which are not closely related) and passed on to AusCo?
Answer 2
Yes, AusCo is liable for GST under the reverse charge provision in Division 84 of the GST Act in relation to other charges involving third parties (which are not closely related), unless the supplies to AusCo would be GST-free or input taxed (if any).
Question 3
Is AusCo liable for GST under the reverse charging provision in Division 84 of the GST Act in relation to services other than management services supplied by other related overseas entities to AusCo?
Answer 3
Yes, AusCo is liable for GST under the reverse charge provision in Division 84 of the GST Act in relation to services supplied by related overseas entities, unless the supplies to AusCo would be GST-free or input taxed (if any).
Question 4
If AusCo is liable for GST in issue (1) above, is AusCo entitled to claim reduced input tax credits in relation to the management services?
Answer 4
Yes, AusCo is entitled to claim reduced input tax credits in accordance with regulation 70-5.02A of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) for any listed 'offshore service(s)' in regulation 70-5.02B of the GST Regulations which are acquired from NRCo.
Question 5
If AusCo is liable for GST in issue (2) above, is AusCo entitled to claim reduced input tax credits in relation to the other charges involving the third parties?
Answer 5
No, AusCo is not entitled to claim reduced input tax credits in accordance with regulation 70-5.02A of the GST Regulations for the listed 'offshore service(s)' in regulation 70-5.02B of the GST Regulations which are acquired from third parties (either directly, or through a related overseas entity) and passed on to AusCo.
However, AusCo may be entitled to claim reduced input taxed credits for certain other (general) services covered in Issue 6.
Question 6
If AusCo is liable for GST in issue (3) above, is AusCo entitled to claim reduced input tax credits in relation to services other than management services supplied by related overseas entities?
Answer 6
AusCo is entitled to claim reduced input tax credits under regulation 70-5.02 of the GST Regulations for other services which are acquired from other related overseas entities, provided the service(s) is listed within a category under subregulation 70-5.02(2) of the GST Regulations. If the service(s) is not listed under subregulation 70-5.02(2) of the GST regulations, there is no entitlement to reduced input taxed credits.