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Indirect Tax Legislation Amendment Bill 2000
Schedule 5 Financial supplies

   

A New Tax System (Goods and Services Tax) Act 1999

1  Paragraph 11-15(4)(b)

Repeal the paragraph, substitute:

                     (b)  you do not * exceed the financial acquisitions threshold.

2  At the end of section 11-15

Add:

             (5)  An acquisition is not treated, for the purposes of paragraph (2)(a), as relating to making supplies that would be * input taxed to the extent that:

                     (a)  the acquisition relates to making a * financial supply consisting of a borrowing; and

                     (b)  the borrowing relates to you making supplies that are not input taxed.

3  Paragraph 15-10(4)(b)

Repeal the paragraph, substitute:

                     (b)  you do not * exceed the financial acquisitions threshold.

4  At the end of section 15-10

Add:

             (5)  An acquisition is not treated, for the purposes of paragraph (2)(a), as relating to making supplies that would be * input taxed to the extent that:

                     (a)  the acquisition relates to making a * financial supply consisting of a borrowing; and

                     (b)  the borrowing relates to you making supplies that are not input taxed.

5  After subsection 70-5(1)

Insert:

          (1A)  However, an acquisition is not a reduced credit acquisition if, without this Division applying, an entity is entitled to an input tax credit for the acquisition.

Note:          Acquisitions relating to financial supplies can give rise to input tax credits: see subsections 11-15(4) and (5).

6  Subsection 129-5(2)

Omit all the words after “unless”, substitute “you * exceed the financial acquisitions threshold”.

7  After section 188-35

Insert:

Division 189 Exceeding the financial acquisitions threshold

   

189-1   What this Division is about

You can be entitled to input tax credits for your acquisitions relating to financial supplies (even though financial supplies are input taxed) if you do not exceed the financial acquisitions threshold.

189-5   Exceeding the financial acquisitions threshold—current acquisitions

General

             (1)  You exceed the financial acquisitions threshold at a time during a particular month if, assuming that all the * financial acquisitions you have made, or are likely to make, during the 12 months ending at the end of that month were made solely for a * creditable purpose, either or both of the following would apply:

                     (a)  the amount of all the input tax credits to which you would be entitled for those acquisitions would exceed $50,000 or such other amount specified in the regulations;

                     (b)  the amount of the input tax credits referred to in paragraph (a) would be more than 10% of the total amount of the input tax credits to which you would be entitled for all your acquisitions and importations during that 12 months (including the financial acquisitions).

Members of GST groups

             (2)  If you are a * member of a * GST group, you exceed the financial acquisitions threshold at a time during a particular month if, assuming that all the * financial acquisitions you or any other member of the group have made, or are likely to make, during the 12 months ending at the end of that month were made solely for a * creditable purpose, either or both of the following would apply:

                     (a)  the amount of all the input tax credits to which you or any other member of the group would be entitled for those acquisitions would exceed $50,000 or such other amount specified in the regulations;

                     (b)  the amount of the input tax credits referred to in paragraph (a) would be more than 10% of the total amount of the input tax credits to which you or any other member of the group would be entitled for all acquisitions and importations of any member of the group during that 12 months (including the financial acquisitions).

189-10   Exceeding the financial acquisitions threshold—future acquisitions

General

             (1)  You exceed the financial acquisitions threshold at a time during a particular month if, assuming that all the * financial acquisitions you have made, or are likely to make, during that month and the next 11 months were made solely for a * creditable purpose, either or both of the following would apply:

                     (a)  the amount of all the input tax credits to which you would be entitled for those acquisitions would exceed $50,000 or such other amount specified in the regulations;

                     (b)  the amount of the input tax credits referred to in paragraph (a) would be more than 10% of the total amount of the input tax credits to which you would be entitled for all your acquisitions and importations during those months (including the financial acquisitions).

Members of GST groups

             (2)  If you are a * member of a * GST group, you exceed the financial acquisitions threshold at a time during a particular month if, assuming that all the * financial acquisitions you or any other member of the group have made, or are likely to make, during that month and the next 11 months were made solely for a * creditable purpose, either or both of the following would apply:

                     (a)  the amount of all the input tax credits to which you or any other member of the group would be entitled for those acquisitions would exceed $50,000 or such other amount specified in the regulations;

                     (b)  the amount of the input tax credits referred to in paragraph (a) would be more than 10% of the total amount of the input tax credits to which you or any other member of the group would be entitled for all acquisitions and importations of any member of the group during those months (including the financial acquisitions).

189-15   Meaning of financial acquisition

                   A financial acquisition is an acquisition that relates to the making of a * financial supply (other than a financial supply consisting of a borrowing).

8  Section 195-1 (definition of annual turnover of financial supplies )

Repeal the definition.

9  Section 195-1

Insert:

exceed the financial acquisitions threshold has the meaning given by Division 189.

10  Section 195-1

Insert:

financial acquisition has the meaning given by section 189-15.

11  Section 195-1 (definition of reduced credit acquisition )

Omit “subsection 70-5(1)”, substitute “section 70-5”.