This GST Determination, released on Wed 25.9.2013, states that in the circumstances covered by the Determination, item 32 of the table in subreg 70-5.02(2) of the GST Regulations applies to some extent, to an acquisition by a managed investment fund that is a recognised trust scheme from a Responsible Entity.
According to the Determination, in calculating its entitlement to a reduced input tax credit under s 70-15 of the GST Act, it is necessary for the managed investment fund to determine the extent to which its acquisition is covered by item 32 (in which case the percentage of the reduced input tax credit is 55%) and the extent to which its acquisition is covered by other reduced credit acquisition items (in which case the percentage of the reduced input tax credit is 75%). It states the fund can apply any fair and reasonable methodology to determine the value of the part to which item 32 applies and the value of any other part to which other reduced credit acquisition items apply.
The Determination states that a “deductive benchmarking methodology” is fair and reasonable where it reasonably approximates the respective values of the parts of the acquisitions. It was previously released as Draft GST Determination GSTD 2013/D1 and is unchanged.
DATE OF EFFECT: Applies from 1 July 2012.
[LTN 186, 25/9/13]
Extract from the GST Act (Reduced Input Tax Credits)
70-5 Acquisitions that attract the reduced credit
(1) The regulations may provide that acquisitions of a specified kind that relate to making *financial supplies can give rise to an entitlement to a reduced input tax credit. These are reduced credit acquisitions.
(1A) However, an acquisition is not a reduced credit acquisition to the extent (if any) that, without this Division applying, an entity is entitled to an input tax credit for the acquisition.
(2) For each kind of *reduced credit acquisition specified, the regulations must specify a percentage to which the input tax credit is reduced.
70-15 How much are the reduced input tax credits?
(1) The amount of an input tax credit for a *creditable acquisition of a *reduced credit acquisition is an amount equal to the GST payable on the supply of the acquisition multiplied by the percentage specified under subsection 70-5(2) for acquisitions of that kind.
(2) However, the amount of such an input tax credit is further reduced if the acquisition is only *partly creditable.
(3) This section has effect despite section 11-25 (which is about the amount of input tax credits).
Extract from GST Regulation 7-05
70-5.02 Acquisitions that attract reduced input tax credits: general (Act s 70-5)
(1) For subsection 70-5(1) of the Act, an acquisition mentioned in subregulation (2) that relates to making financial supplies gives rise to an entitlement to a reduced input tax credit.
(2) The following acquisitions (within the meaning of subsection 70-5(1) of the Act) are reduced credit acquisitions:
…
Item 32: Supplies to Recognised Trust Schemes
Supplies acquired by a recognised trust scheme, to the extent that:
(a) the supplies are acquired on or after 1 July 2012; and
(b) the supplies acquired are not:
(i) a supply by way of sale of goods or supply of real property made by:
(A) selling a freehold interest in land; or
(B) selling a stratum unit; or
(C) granting or selling a long-term lease; or
(ii) a brokerage service covered by item 9 or 21; or
(iii) a service covered by paragraph (a), (b) or (e) of item 23; or
(iv) a service covered by paragraph (a), (b), (c), (d), (e), (f), (g) or (i) of item 24; or
(v) a custodial service covered by item 29; or
(vi) a service covered by item 30; or
(vii) a service covered by item 33