22 Feb 10 ATO examining takeover arrangements - TA 2010/1
In media release No 2010/1 issued on 18 February 2010, the Commissioner, Michael D’Ascenzo, announced the release of Taxpayer Alert TA 2010/1 ("GST - interposing an associated 'financial supply facilitator' to enhance claims for reduced input tax credits for expenses incurred in the course of a company takeover"), and warned that the ATO will take a close look at uncommercial arrangements designed to claim unintended GST benefits for a company’s float, merger or acquisition.
Under these arrangements, a company involved in a takeover uses a related associate to procure all the services required for that takeover - for example legal and accounting advice. The associate then bundles those services and invoices the company for the one supply. The company then claims reduced input tax credits that they wouldn’t normally be entitled to if they had acquired these services directly from the service provider.