Edited version of private advice

Authorisation Number: 1052031647673

Date of advice: 13 September 2022

Ruling

Subject: GST and creditable acquisitions

Question

Is Entity A (you) entitled to an input tax credit, in accordance with section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), for services acquired from Entity B (Supplier) under the Supplier Agreement (Supplier Agreement)?

Answer

Yes, you are entitled to an input tax credit for the acquisition of Services made under Supplier Agreement.

Section 11-20 of the GST Act provides that an entity is entitled to an input tax credit for any creditable acquisition that the entity makes. Section 11-5 provides the meaning of creditable acquisition and explains that you make a creditable acquisition if:

(a) you acquire anything solely or partly for a creditable purpose; and

(b) the supply of the thing to you is a taxable supply; and

(c) you provide, or are liable to provide, consideration for the supply; and

(d) you are registered, or required to be registered.

Section 11-15 of the GST Act sets out the meaning of creditable purpose and provides that an acquisition is not made for a creditable purpose where it relates to a supply that would be input taxed.

In this case, you contractually engage with the Supplier who is registered for GST and make the relevant acquisition of the taxable supply. The acquisition from the Supplier is made for a creditable purpose as it relates to your supply of home care to clients. That is, the acquisition does not relate to a supply by you that would be input taxed. Further you provide consideration for the supplies you acquire from the Supplier, and you are registered for GST.

Consequently, you make a creditable acquisition and are entitled to the relevant input tax credit.

This ruling applies for the following period:

1 September 2022 till quarter ending 31 December 2026

The scheme commences on:

1 September 2022

Relevant facts and circumstances

You are a home care package provider and is registered for GST.

You enter into a contract with home care recipients (clients) known as the Home Care Package Contract (Contract) under which you supply your home care services.

You receive consideration (i.e. payment) from your clients for the home care services you provide.

You have also entered into an agreement known as the Supplier Agreement Schedule (the Supplier Agreement) with Entity B (the Supplier). A copy of the Supplier Agreement together with the Standard Conditions have been provided as part of this ruling request.

Under the terms of the Supplier Agreement, you acquire services (the Services) which are defined as the care provided to the Clients(s) by you as specified in the Schedule and any service request.

In consideration for the Services, you provide the service fee which is defined in the Supplier Agreement as 'the fee we will pay you for providing the Services to the client as set out in The Schedule (as applicable)'

Pursuant to the Supplier Agreement you are entitle to a discount on the hourly rate payable to the Supplier where you satisfy the conditions listed in this clause.

The Supplier is registered for GST.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 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 Section 11-20