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21 Nov 11 Draft ruling released about the application of GST to financial assistance payments

On 2 November 2011, the ATO released draft ruling GSTR 2011/D4 entitled "Goods and services tax: financial assistance payments". The final ruling is scheduled to be issued on 30 May 2012.

The draft ruling is a rewrite of GSTR 2000/11 entitled "Goods and services tax: grants of financial assistance". It explains when GST is payable in relation to a financial assistance payment. The draft ruling clarifies certain issues that have caused some taxpayers to treat certain supplies as a taxable supplies that are not now regarded as being a taxable supplies.

Accordingly, the ATO proposes the following transitional arrangement:

"You can continue to rely on the views expressed in GSTR 2000/11 for payments made before 31 December 2012 if both of the following apply:

  • the arrangement between the parties was entered into before the date of issue of the final ruling
  • the GST consequences of the treatment of financial assistance payments made under those arrangements are impacted by any conflict between the views expressed in the final ruling and GSTR 2000/11.

Where you have entered into arrangements that you cannot alter to take into account a change in GST treatment as a result of the views expressed in the final ruling, you should apply to the ATO, in writing, for us to consider your circumstances on a case-by-case basis."


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