GST issues registers
Financial services - questions and answersSuper funds
(a) added, (u) updated, (w) withdrawn
| Issue no | Issue | Date |
|---|---|---|
| 6.1 | Is a superannuation fund an entity for the purposes of the GST Act? | 1 January 2001 |
| 6.2 | Does the trustee of a superannuation fund also constitute an entity for the purpose of the GST Act? | 1 January 2001 |
| 6.3 | Is the superannuation fund or the trustee required to be registered for GST (subject to the enterprise test)? | 1 January 2001 |
| 6.4 | When is a trustee of a complying superannuation fund required to be registered for GST purposes? | 1 January 2001 |
| 6.5 | When is a trustee in its capacity as a trustee of a non-complying superannuation fund required to be registered? | 1 January 2001 |
| 6.6 | What is 'GST' turnover? | 1 January 2001 |
| 6.7 | If the only income of a superannuation fund consists of dividends and interest, is the superannuation fund required to register for GST? | 1 January 2001 |
| 6.8 | Is a GST registered superannuation fund entitled to input tax credits? | 1 January 2001 |
| 6.9 | Given that a superannuation fund will predominantly make financial supplies (that is the provision of an interest in the superannuation scheme), is it entitled to reduced input tax credits (RITCs)? | 1 January 2001 |
| 6.10 | Where the services are supplied to an employer sponsored superannuation fund by a third party, and the services are paid by the employer company, who is entitled to the input tax/reduced input tax credits? | 1 January 2001 |
| 6.11 | Is the superannuation fund able to claim reduced input tax credits on tax and audit fees incurred? | 7 September 2012(u) |
| 6.12 | Are management fees charged by a fund manager to the superannuation fund subject to GST? | 1 April 2019(u) |
| 6.13 | Are management fees charged by a superannuation fund to the members subject to GST? | 1 January 2001 |
| 6.14 | Are entry and exit fees charged by a superannuation fund to the members subject to GST? | 1 January 2001 |
| 6.15 | Can a superannuation fund issue recipient-created tax invoices? | 1 January 2001 |
| 6.16 | What are the GST consequences of entering into an agreement under section 275 of the Income Tax Assessment Act 1936 (ITAA 1936)? | 15 April 2013 (u) |
6.1. Is a superannuation fund an entity for the purposes of the GST Act?
Non-interpretative - straight application of the law
Yes, a superannuation fund is an entity in accordance with paragraph 184-1(1)(h) of the GST Act.
6.2. Does the trustee of a superannuation fund also constitute an entity for the purpose of the GST Act?
Non-interpretative - straight application of the law
Yes, the trustee of a superannuation fund is also considered to be an entity under subsection 184-1(2) of the GST Act.
6.3. Is the superannuation fund or the trustee required to be registered for GST (subject to the enterprise test)?
Non-interpretative - straight application of the law
It is the entity comprising the trustee of the superannuation fund that is capable of being registered for GST purposes. A superannuation fund is not a legal person - it does not have the legal capacity to carry out the obligations imposed under the GST Act. The trustee of the superannuation fund has the legal capacity to carry out the obligations under the GST Act. Hence, the trustee is the entity that is capable of being registered.
Subsection 184-1(3) provides that a legal person can have a number of different capacities in which the person does things. In each of those capacities, the person is taken to be a different entity.
6.4. When is a trustee of a complying superannuation fund required to be registered for GST purposes?
Non-interpretative - straight application of the law
A trustee in its capacity as trustee of a complying superannuation fund is required to be registered for GST purposes if the GST turnover of the enterprise exceeds $75,000. Where the GST turnover is less than $75,000 the trustee may still choose to register in its capacity as trustee for the complying superannuation fund.
6.5. When is a trustee in its capacity as a trustee of a non-complying superannuation fund required to be registered?
Non-interpretative - straight application of the law
A trustee, in its capacity as a trustee of a non-complying superannuation fund is required to be registered for GST purposes if it is carrying on an enterprise and its GST turnover exceeds $75,000.
Note: All following references to the superannuation fund are taken to be a reference to the trustee in its capacity as trustee of the superannuation fund.
6.6. What is 'GST turnover?
For GST, Luxury Car Tax and Wine Equalisation Tax purposes, from 1 July 2015, where the term 'Australia' is used in this item it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act.
Non-interpretative - straight application of the law
The GST turnover for an enterprise meets the turnover threshold if:
- •
- the current GST turnover is $75,000 or above and the Commissioner is not satisfied that your projected GST turnover is below $75,000, or
- •
- the projected GST turnover is $75,000 or above.
Current GST turnover is the sum of:
- •
- supplies made, or likely to be made, in the current month, plus
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- supplies made in the previous 11 months, less
- •
- supplies excluded.
Supplies that are excluded in the calculation of current GST turnover are:
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- supplies that are input taxed
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- supplies that are for no consideration
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- supplies that are not made in the course of your enterprise, or
- •
- supplies that are not connected with Australia.
Projected GST turnover is the sum of:
- •
- supplies made, or likely to be made, in the current month, plus
- •
- supplies made, or likely to be made, in the next 11 months, less
- •
- supplies excluded.
Supplies that are excluded in the calculation of projected GST turnover are:
- •
- supplies that are input taxed
- •
- supplies that are for no consideration
- •
- supplies that are not made in the course of your enterprise
- •
- supplies that are not connected with Australia
- •
- supplies that are made by transfer of capital assets, or
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- supplies that are made when an enterprise is ceased or is substantially and permanently reduced in size or scale.
Examples of supplies excluded from GST turnover are:
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- dividends
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- unit trust distributions
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- interest
- •
- members' contributions
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- undeducted contributions
- •
- employer contributions
- •
- supplies to associates for no consideration
- •
- supplies not connected with Australia
- •
- supplies not in connection with an enterprise - for example, private sales
- •
- payments of money made in settlement of a claim under an insurance policy.
6.7. If the only income of a superannuation fund consists of dividends and interest, is the superannuation fund required to register for GST?
Non-interpretative - straight application of the law
Dividends and interest are not included in the GST turnover. Therefore, if the income of the superannuation fund consists only of interest and dividends, the GST turnover for GST purposes will not exceed $75,000. The superannuation fund will not be required to register for GST purposes.
6.8. Is a GST registered superannuation fund entitled to input tax credits?
Non-interpretative - straight application of the law
Yes, to the extent that the acquisition does not relate to the making of financial supplies.
For example, if the superannuation fund leases out commercial premises and incurs GST on rental management fees, the superannuation fund may be entitled to the input tax credit in relation to the GST paid (to the extent that the acquisition is a creditable acquisition).
6.9. Given that a superannuation fund will predominantly make financial supplies (that is, the provision of an interest in the superannuation scheme), is it entitled to reduced input tax credits (RITCs)?
Non-interpretative - straight application of the law
Yes, it is entitled to RITCs to the extent that:
- •
- the acquisition relates to making financial supplies
- •
- the acquisition is listed as a reduced credit acquisition under Division 70 of the GST Regulations.
6.10. Where the services are supplied to an employer sponsored superannuation fund by a third party, and the services are paid by the employer company, who is entitled to the input tax/reduced input tax credits?
Non-interpretative - straight application of the law
The supply of services provided to the superannuation fund by the appointed third party firm will be a taxable supply subject to GST under section 9-5 of the GST Act.
Subsection 9-15(2) of the GST Act provides that the taxable nature of the supply does not alter despite the consideration for the services being provided by an entity that is not the recipient of the supply.
The company providing the consideration for the supply is not entitled to an input tax credit for the GST imposed on the services, as the supply is not a creditable acquisition. The supply of services in this circumstance is a taxable supply made to the recipient - the superannuation fund - not the company that provides the consideration. Therefore, the company has not made a creditable acquisition under section 11-5 of the GST Act.
Where the acquisition relates to financial supplies made by the superannuation fund, the superannuation fund may be entitled to a reduced input tax credit provided the fund is liable for payment of the services.
6.11. Is the superannuation fund able to claim reduced input tax credits on tax and audit fees incurred?
Non-interpretative - straight application of the law
From 1 July 2012, a new reduced input tax credit (RITC) item 32 applies to 'recognised trust schemes'. These include approved deposit funds, pooled superannuation trusts, public sector superannuation schemes and regulated superannuation funds, but do not include self-managed superannuation funds.
Under the new item 32, a superannuation fund that is a recognised trust schemes will be entitled to a reduced input tax credit at a rate of 55% for purchases to the extent those purchases are made on or after 1 July 2012 and are not specifically excluded under item 32. As expenses relating to the tax or auditing affairs are not specifically excluded from item 32 a superannuation fund that is a recognised trust scheme will be able to claim a reduced input tax credit of 55% of the GST incurred on tax and audit fees to the extent those purchases are made on or after 1 July 2012.
A superannuation fund which is not a recognised trust scheme will not be able to claim any reduced input tax credits on tax and audit fees incurred, where the expenses relate to the tax or auditing affairs of the superannuation fund.
6.12. Are management fees charged by a fund manager to the superannuation fund subject to GST?
Non-interpretative - straight application of the law
Yes, the provision of management services by a fund manager is a taxable supply.
Where the fee is charged to a superannuation fund that is not a recognised trust scheme, the superannuation fund will be entitled to a reduced input tax credit under items 23 and 24 in the table in subsection 70-5.02(2) of the GST Regulations, where the service acquired is one of those listed.
From 1 July 2012 a recognised trust scheme will be entitled to a reduced input tax credit at the reduced rate of 55% for all acquisitions of supplies made to the superannuation fund by the entity that is acting as trustee for the fund to the extent the supplies are acquired on or after 1 July 2012. However a recognised trust scheme will be entitled to a reduced input tax credit at the higher rate of 75% on acquisitions of certain supplies which are excluded from item 32 such as fund management services provided by a fund manager.
6.13. Are management fees charged by a superannuation fund to the members subject to GST?
Non-interpretative - straight application of the law
No, the management fees charged by a superannuation fund to the members are not subject to GST.
The contributions received from a member form part of the assets of the superannuation fund. The trustee notionally allocates the contributions to a notional account in the name of the member. Management fees are drawn down from these notional accounts. It is a cost allocation process rather than an actual payment for a supply. It is not consideration for any supply made by the superannuation fund to the individual members.
6.14. Are entry and exit fees charged by a superannuation fund to the members subject to GST?
Non-interpretative - straight application of the law
No, these fees are for an acquisition and a disposal of a financial supply (that is, an interest in the superannuation fund). They are considered to be financial supplies and are therefore input taxed.
6.15. Can a superannuation fund issue recipient-created tax invoices?
Non-interpretative - straight application of the law
Yes, if the superannuation fund:
- •
- has a turnover (including input taxed supplies) of at least $20 million annually, or
- •
- is a member of a GST group of companies, partnerships or trusts, in which one or more of that group have such a turnover.
Industry associations, whose members are registered recipients of taxable supplies who do not meet this requirement, can request that the Commissioner make a determination on issuing other classes of tax invoices.
6.16. What are the GST consequences of entering into an agreement under section 275 of the Income Tax Assessment Act 1936 (ITAA 1936)?
Non-interpretative - straight application of the law
Section 275 of the ITAA 1936 was repealed on 13 March 2007.
This Issue previously stated:
Section 275 of the ITAA 1936 allows a trustee of a complying superannuation fund or a complying approved deposit fund (ADF) to transfer taxable contributions to a life insurance company or a pooled superannuation trust (PST).
The effect of this provision is that, where the transferor purchases a life insurance policy or units in the PST, the transferor may enter into an agreement to transfer liability to tax on the contributions to the life insurance company or PST.
Entry into the section 275 agreement is not a separate supply. It is a consequence of acquiring an interest in either a life policy or a PST and is, therefore, part of the input taxed supply made when the life policy was issued or the units in the PST were acquired.
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