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ATO Consults on GST Determination on When the Supply of a Transaction Account is GST-Free — Orbitax Tax News & Alerts

The Australian Taxation Office (ATO) has published draft Goods and Services Tax Determination (GSTD) 2020/D1 for consultation, which concerns when the supply of a transaction account is GST-free. The deadline for comments is 3 July 2020. When the final Determination is issued, it is proposed to apply from 1 October 2020.

The ruling included in GSTD 2020/D1 is as follows:

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1. The supply of a transaction account is GST-free under table item 3 of subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 to the extent that the account holder's effective use or enjoyment of the transaction account takes place outside of Australia.

2. Effective use or enjoyment of a transaction account will take place outside of Australia to the extent that:

  • transactions under the account are undertaken while the account holder is physically outside of Australia, and
  • the account holder's presence outside of Australia is integral to that transaction.

3. An account holder's presence outside of Australia is integral to a transaction under the account if the account holder must be physically present at a specific location (outside of Australia) in order to initiate the transaction. The presence of the account holder outside Australia is integral to the performance, receipt or delivery of the supply of the transaction account as the account holder requires immediate access to the transaction account at that time and place.

4. An account holder's presence is integral to transactions where the account holder makes a cash withdrawal (at an automated teller machine (ATM) or branch), or the transaction under the account requires the account holder to be physically present at the merchant or counterparty location. In this Determination, we refer to these transactions as 'account holder present transactions'.