Overview
On 19th December 2001, the Australian Taxation Office released GSTR 2001/D9 . This draft ruling represents an attempt to clarify the interpretation of the Goods and Services Tax ("GST") legislation dealing with the treatment of financial supplies, which is found in Division 40 of A New Tax System (Goods & Services Tax) Act 1999 ("GSTA99"). While financial supplies are given input-taxed status under the Australian GST regime, in certain cases the supply of such a good or service may be classified as a GST-free supply under subdivision 38-E . The GST-free treatment of a financial supply opens up a series of avenues in which taxpayers may be able to plan more effectively with regards to maximizing the extent to which they are able to claim input tax credits in respect of the provision of a financial supply.
This paper represents a clarification of the rules and regulations governing financial supply providers and facilitators, and the current treatment of financial supplies under GSTA99. It also expands on existing legislation to provide an analysis which includes the guidance contained within GSTR 2001/D9 , and analyses the criteria which must be satisfied in order to be able to treat a financial supply as GST-free.
Financial Supplies
The term, 'Financial Supplies' is defined by s.40-5 of GSTA99, as
"(1) A financial supply is input taxed.
(2) Financial supply has meaning given by the regulations."
The definition given by the A New Tax System (Goods & Services Tax) Regulations 1999 ("GSTREG99"), collectively refer to a financial supply as "the provision, acquisition or disposal of an interest" . This provision ...