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Edited version of private advice
Authorisation Number: 1051716776145
Date of advice: 14 July 2020
Ruling
Subject: GST and claiming input tax credits
Question
Is Entity A entitled to an input tax credit in respect of the Payments made to Entity B in accordance with the terms of the Deed?
Answer
No, as the payments are not consideration for a supply there is no entitlement to an input tax credit.
This ruling applies for the following periods:
1 July 2020 till quarter ending 30 June 2022
The scheme commences on:
1 July 2020
Relevant facts and circumstances
· Entity A carries on an enterprise in Australia and is registered for GST.
· Entity A is in the process of a restructure of its business which involves going from being a wholesaler of its product to a retailer of that product to Australian consumers. As such, Entity B, being a current retailer, is no longer required.
· Entity A has notified Entity B that it is seeking to terminate a contract (Agreement) that currently applies in respect of the distribution of product and has notified Entity B of its intention to terminate its Agreement.
· Pursuant to the terms of a Deed between Entity A and Entity B, Entity A makes a payment (Payment) to Entity B
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 11-5
A New Tax System (Goods and Services Tax) Act 1999 11-5(b)