On Wed 27.1.2016, the ATO issued GST Determination GSTD 2016/1 on whether employers can claim input tax credits (ITCs) for expenses paid on behalf of superannuation funds. The Determination notes that an employer may, for “administrative convenience”, pay expenses on behalf of a fund, with the payment being re-classified as a superannuation contribution in the employer’s accounts. However, the ATO’s preferred approach is for all fund expenses to be paid directly out of the fund itself and for superannuation contributions to be made directly to the fund.

GSTD 2016/1 provides that an employer is not entitled to an ITC if a superannuation fund makes an acquisition (eg it receives legal advice) and the employer pays the expense (eg solicitors’ fees) on the fund’s behalf. This is because the supply is made to the fund and not to the employer. However, the ATO notes that the fund may be able to claim a reduced ITC under the financial supply rules (Div 70 of the GST Act) if the requirements of those rules are satisfied.

The GST Determination applies both on and after its date of issue. It was not previously released as a draft, but replaces 2 ATO rulings on the topic, MT 2005/1 and GSTA TPP 003, both of which were withdrawn on and with effect from Wed 27.1.2016. The Commissioner’s views in GSTD 2016/1 are the same as those expressed in the withdrawn rulings.

[LTN 16, 27/1/16]