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Edited version of private advice
Authorisation Number: 1051991324570
Date of advice: 16 June 2022
Ruling
Subject: GST and grants
Question 1
Does Entity X make a creditable acquisition under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) in respect of the grant payments (Grant instalment) made under agreement (Grant Agreement)?
Answer
Yes, the Commissioner of Taxation (Commissioner) accepts that Entity X will make a creditable acquisition under section 11-5 of the GST Act in respect of each Grant instalment made under the Grant Agreement.
Relevantly in accordance with our view in Goods and Services Tax Ruling GSTR 2012/2 Goods and services tax: financial assistance payments (GSTR 2012/2) we consider that in this case there is a supply of an enforceable obligation that arises under the Grant Agreement. Further, it is accepted that the Grant instalments represents consideration for this supply as there is a relationship between the supply and the consideration. Therefore, on the basis that the requirements of a taxable supply are satisfied by the Recipient of the grant (as Supplier), it is accepted that Entity X will make a creditable acquisition under the Grant Agreement
Question 2
Is the creditable acquisition made on a periodic or progressive basis under section 156-10 of the GST Act, with input tax credits being attributable in respect of each Grant instalment?
Answer
Yes.
Consistent with the view in GSTR 2000/35 Goods and services tax: Division 156 - supplies and acquisitions made on a progressive or periodic basis (GSTR 2000/35), the creditable acquisition made by Entity X is made on a periodic or progressive basis under section 156-10 of the GST Act, with input tax credits being attributable in respect of each Grant instalment when it is paid.
This ruling applies for the following period:
1 June 20XX till quarter ending 31 December 20XX
The scheme commences on:
1 June 20XX
Relevant facts and circumstances
The description of the scheme is based on information provided by Entity X in the following documents, which are to be read in conjunction with the facts as set out below:
• the Application Guidelines
• the Grant Agreement between Entity X and the Recipient of the Grant
Entity X and a Recipient have entered into an agreement (the Grant Agreement).
Under the terms of the Grant Agreement the Recipient is paid by way of instalments (the Grant instalments) to undertake activities (the Project).
The Grant Agreement applies for a specified period.
Entity X is registered for GST.
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(c)
A New Tax System (Goods and Services Tax) Act 1999 156-10